For personal use only
Prospectus and
PEPS Reinvestment
Offer Information
Bank of
Queensland Limited
Convertible
Preference Shares
Prospectus for the issue of Bank of Queensland Limited
Convertible Preference Shares to raise $250 million with
the ability to raise more or less
Issuer
Bank of Queensland Limited ABN 32 009 656 740
Structuring Adviser
Merrill Lynch International (Australia) Limited
Joint Lead Managers
Commonwealth Bank of Australia
Merrill Lynch International (Australia) Limited
National Australia Bank Limited
RBS Morgans Limited
Co-Managers
Bell Potter Securities Limited
Ord Minnett Limited
IMPORTANT NOTICEs
This Prospectus
This Prospectus is dated 19 November 2012 and was lodged with the Australian
Securities and Investments Commission (ASIC) on that date. This is a replacement
prospectus that replaces the prospectus dated and lodged with ASIC on 7 November
2012. The offer contained in this Prospectus is for an issue of Convertible Preference
Shares (CPS) (Offer) by Bank of Queensland Limited (ABN 32 009 656 740) (Bank
of Queensland or BOQ).
The pro-forma financial information provided in this Prospectus is for illustrative
purposes only and is not represented as being indicative of BOQ’s view on its future
financial condition and/or performance. The basis of its preparation is set out in
Section 3.2.
Neither ASIC nor ASX take any responsibility for the content of this Prospectus or the
merits of the investment to which this Prospectus relates.
Forward looking statements should be read in conjunction with the risk factors in
Section 4 and other information in this Prospectus.
Exposure Period
Prospectus availability
The Corporations Act prohibits the processing of Applications in the period of seven
days after 7 November 2012 (Exposure Period), being the date on which the original
Prospectus was lodged with ASIC. This Exposure Period may be extended by ASIC by
up to a further seven days. The Exposure Period is intended to enable this Prospectus
to be examined by market participants prior to the raising of funds. No applications
received during the Exposure Period were to be accepted until after the expiry of that
period. No preference is given to applications received in the Exposure Period.
Paper copies of this Prospectus can be obtained free of charge by calling the BOQ
Offer Information Line on 1800 779 639 (within Australia) or +61 2 8280 7626
(outside Australia) (8:30am to 7:30pm Sydney time Monday to Friday). This
Prospectus can be accessed electronically at www.boq.com.au.
For personal use only
BOQ has applied to ASX Limited (ASX) for the CPS to be quoted on ASX.
This Prospectus contains forward looking statements indicated by words such as
“may”, “could”, “believes”, “considers”, “expects”, “estimates” and “intends”. Such
statements are subject to risks and uncertainties that could cause actual results,
performance or achievements to differ materially from the outcomes expressed or
implied by the forward looking statements in this Prospectus.
This Prospectus expires on the date which is 13 months after 7 November 2012
(Expiry Date) and no CPS will be issued on the basis of this Prospectus after the
Expiry Date.
Nature of CPS
CPS are non-cumulative, perpetual, convertible, unguaranteed and unsecured
preference shares with preferred, discretionary dividends, issued by BOQ. They are
an investment in BOQ and may be affected by the ongoing performance, financial
position and solvency of BOQ.
An investment in CPS is subject to investment risk including possible loss of income
and principal invested. Please see Section 4 “Investment Risks” for further details.
Neither BOQ nor any other person warrants or guarantees the future performance of
BOQ, CPS or any return on any investment made pursuant to this Prospectus.
CPS are not deposits or protected accounts and are
not guaranteed
Investments in CPS are not deposit liabilities of BOQ and are not protected accounts
for the purposes of the depositor protection provisions of Australian banking
legislation and they are not guaranteed or insured by any government, government
agency or compensation scheme of Australia or any other jurisdiction.
No representations other than in this Prospectus
No person is authorised to give any information, or to make any representation, in
connection with the Offer described in this Prospectus that is not contained in this
Prospectus. Any information or representation that is not in this Prospectus may not
be relied on as having been authorised by BOQ or any other person in connection with
the Offer.
Prospectus does not include financial product or
investment advice - you should seek your own
professional investment advice
The information in this Prospectus is not financial product advice and does not take
into account your individual investment objectives, financial situation or needs. You
should carefully consider the whole of this Prospectus in light of your particular
investment needs, objectives and financial situation (including your taxation situation)
and seek professional advice from your stockbroker, solicitor, accountant or other
professional adviser before deciding whether to invest in CPS.
This Prospectus also contains information in relation to the Reinvestment Offer.
Neither BOQ nor any other person is providing any investment advice or making any
recommendation to Eligible PEPS Holders in respect of the Reinvestment Offer.
Past financial performance information
Historical financial information in this Prospectus is for information purposes only
and is not a forecast of future performance. Past performance or trends should not be
relied on as being indicative of future performance or trends.
1
Financial information and forward looking
statements
BOQ CPS PROSPECTUS 2012
If you access the Prospectus in electronic form, the following conditions apply:
ıı
you must access and download the entire Prospectus;
ıı
y our Application will only be considered where you have applied on an Application
Form (either electronic or paper) that accompanied the complete electronic
Prospectus. By making an Application, you declare that you were given access to
the complete Prospectus together with the Application Form; and
ıı
the Prospectus is available electronically to residents of Australia and New Zealand
accessing and downloading or printing the electronic Prospectus in Australia.
Foreign jurisdictions
The distribution of this Prospectus in jurisdictions outside Australia and New Zealand
may be restricted by law. If you come into possession of it outside Australia or
New Zealand you should seek advice on such restrictions and observe any such
restrictions. Any failure to comply with such restrictions may constitute a violation of
applicable securities laws.
Nothing in this Prospectus is to be construed as authorising the distribution of the
Prospectus and the making of the Offer in any jurisdiction other than Australia and
New Zealand. CPS may be offered in a jurisdiction outside Australia or New Zealand
only where such an offer is made in accordance with the laws of that jurisdiction.
CPS have not been, and will not be, registered under the United States Securities Act
of 1933 (US Securities Act) and may not be offered or sold in the United States
(US), except in transactions exempt from, or not subject to, registration under the US
Securities Act and applicable US state securities laws.
Providing personal information and privacy
You will be asked to provide personal information to BOQ (directly or via the Registry)
if you apply for CPS. See Section 10.7 for information on how BOQ (and the Registry
on its behalf) collects, holds and uses this personal information.
Diagrams
Diagrams used in the Prospectus are illustrative only and may not be drawn to scale.
Unless otherwise stated, all data contained in charts, graphs and tables is based on
information available at the date of this Prospectus.
Defined words and expressions
Some words and expressions used in this Prospectus have defined meanings, which
are either explained in the Glossary in Appendix B or in the CPS Terms set out in
Appendix A of this Prospectus.
A reference to $, A$, AUD dollars and cents is to Australian currency, unless otherwise
stated. Unless otherwise stated, references to times in this Prospectus are to Sydney time.
Enquiries
If you have any questions in relation to the Offer, please contact your stockbroker,
solicitor, accountant or other professional adviser. You may also call the BOQ Offer
Information Line on 1800 779 639 (within Australia) or +61 2 8280 7626 (outside
Australia) (8:30am to 7:30pm Sydney time Monday to Friday). Applicants in the
Broker Firm Offer may also contact their Syndicate Broker.
ASIC guidance for retail investors
For personal use only
ASIC has published guidance which may be relevant to your consideration of CPS – namely, information for retail investors who are considering
investing in hybrid securities called “Hybrid securities and notes” (under the heading “Complex investments” at www.moneysmart.gov.au/investing)
(ASIC Guidance). Free copies of the ASIC Guidance can be obtained from ASIC’s website at www.moneysmart.gov.au/investing or by calling ASIC
on 1300 300 630 (from Australia) or + 61 3 5177 3988 (from outside Australia).
Where can I obtain further information about BOQ and CPS?
BOQ is a disclosing entity for the purposes of the Corporations Act and, as a result, is subject to regular reporting and disclosure obligations under
the Corporations Act and the ASX Listing Rules. In addition, BOQ must notify ASX immediately (subject to certain exceptions) if it becomes aware
of information about BOQ that a reasonable person would expect to have a material effect on the price or value of its securities including, once
issued, CPS.
Copies of documents lodged by BOQ with ASIC and ASX can be obtained from, or inspected at, an ASIC office and can also be obtained from
www.asx.com.au.
Further information about BOQ is available at www.boq.com.au.
Important statement for New Zealand investors
This offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act
2001 and Regulations. In New Zealand, this is Part 5 of the Securities Act 1978 and the Securities (Mutual Recognition of Securities Offerings – Australia)
Regulations 2008.
This offer and the content of the offer document are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act 2001
and Regulations (Australia) set out how the offer must be made.
There are differences in how securities are regulated under Australian law. For example, the disclosure of fees for collective investment schemes is different
under the Australian regime.
The rights, remedies, and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies, and
compensation arrangements for New Zealand securities.
Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to this offer. If you need to make a complaint about this
offer, please contact the Financial Markets Authority, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle
your complaint.
The taxation treatment of Australian securities is not the same as for New Zealand securities.
If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser.
The offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down
according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant.
If you expect the securities to pay any amounts in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a
bank account in New Zealand in New Zealand dollars.
If the securities are able to be traded on a securities market and you wish to trade the securities through that market, you will have to make arrangements for a
participant in that market to sell the securities on your behalf. If the securities market does not operate in New Zealand, the way in which the market operates,
the regulation of participants in that market, and the information available to you about the securities and trading may differ from securities markets that
operate in New Zealand.
BOQ CPS PROSPECTUS 2012
2
For personal use only
CONTENTS
IMPORTANT NOTICES
1
CHAIRMAN’S LETTER
4
KEY DATES
5
1. INVESTMENT OVERVIEW
6
2. ABOUT CPS
21
3. ABOUT BOQ
45
4. INVESTMENT RISKS
54
5. ABOUT THE REINVESTMENT OFFER
66
6. ABOUT THE OFFER
74
7. AUSTRALIAN TAXATION SUMMARY
86
8. SUMMARY OF IMPORTANT DOCUMENTS
93
9. KEY PEOPLE, INTERESTS AND BENEFITS
96
10. ADDITIONAL INFORMATION
99
Appendix A – CPS TERMS103
APPENDIX B – GLOSSARY127
Application form131
Corporate Directory136
3
BOQ CPS PROSPECTUS 2012
CHAIRMAN’S LETTER
19 November 2012
For personal use only
Dear investor,
On behalf of the Board of Bank of Queensland Limited, I am pleased to offer you the opportunity to invest in Convertible Preference Shares (CPS).
BOQ is an Australian ASX listed bank comprising three key business lines: Banking (Retail and Business Banking), BOQ Finance and St Andrew’s Insurance.
BOQ intends to raise $250 million through the offer of CPS with the ability to raise more or less. The proceeds of the CPS will be used for BOQ’s general
corporate purposes, including effecting the buy-back of BOQ’s Perpetual Equity Preference Shares (PEPS) under the Reinvestment Offer (see below) and
providing BOQ with further capacity for continued growth. This issue of CPS is being made as part of BOQ’s capital management strategy. The CPS qualify as
regulatory capital of BOQ for Australian Prudential Regulation Authority (APRA) prudential purposes.
CPS are fully paid, unsecured, non-cumulative, perpetual, convertible preference shares. They will pay, subject to the issue terms and the directors’ discretion,
preferred floating rate semi-annual dividends which are expected to be fully franked.
The CPS will Mandatorily Convert into fully paid ordinary shares of BOQ on 15 April 2020 if certain Conversion Conditions are satisfied, unless they are
Converted or Redeemed by BOQ earlier. If those Conversion Conditions are not satisfied, then the CPS Mandatorily Convert on the first dividend payment date
after 15 April 2020 on which the conditions are satisfied.
The CPS may be Converted, Redeemed or Transferred at the option of BOQ on 15 April 2018 and must Convert if at any time there is a successful takeover of
BOQ, in each case Conversion being subject to the Conversion Conditions being satisfied at the time.
Importantly, BOQ must Convert the CPS to ordinary shares if BOQ’s Common Equity Tier 1 Capital Ratio is equal to or less than 5.125% on a Level 1 or Level
2 basis or if APRA, the financial services industry regulator, considers that conversion is necessary to prevent BOQ from becoming non-viable. This may
adversely affect returns on the CPS.
An application will be made by BOQ for CPS to be quoted on the ASX. The key features of CPS are set out in Section 2 of this Prospectus.
Reinvestment Offer
As part of the CPS offer, registered PEPS Holders as at 9 November 2012 (Eligible PEPS Holders) have the opportunity to exchange their PEPS for CPS
(Reinvestment Offer). Eligible PEPS Holders who elect to participate in the Reinvestment Offer will have their PEPS bought back by BOQ and the proceeds
applied to investment in CPS. Eligible PEPS Holders who elect not to participate in the Reinvestment Offer will continue holding PEPS. BOQ has determined
not to redeem PEPS on the first optional call date of 17 December 2012.
Details for Eligible PEPS Holders are in Section 5 of the Prospectus.
Shareholder Offer
As part of the CPS offer, Eligible Shareholders of BOQ as at 9 November 2012 have the opportunity to apply for an allocation of CPS in priority to General
Applicants. Details are set out in Section 6.5.2 of the Prospectus. No assurance is given that any Shareholder Applicant or General Applicant will receive an
allocation of CPS.
Conclusion
The key dates of the CPS offer are summarised on page 5. The offer may close early, so you are encouraged to submit your application as soon as possible
after the opening date. The issue of CPS under the offer is subject to certain shareholder approvals to be proposed at the BOQ Annual General Meeting on
13 December 2012, including approval of the CPS Terms and of the buy-back of PEPS under the Reinvestment Offer. The issue of CPS will not proceed unless
these approvals are obtained.
On behalf of the Directors, I encourage you to read this Prospectus carefully. The terms of the CPS are more complex than a simple debt instrument or ordinary
equity instrument and trading volumes on ASX in instruments such as CPS are typically lower than in BOQ’s ordinary shares. In particular, you should
consider the risk factors set out in Section 4 before deciding whether to apply for CPS.
If, after reading this Prospectus, you have any questions about the CPS offer or how to apply, please call the BOQ Offer Information Line on 1800 779 639
(within Australia) or +61 2 8280 7626 (outside Australia) (Monday to Friday – 8:30am to 7:30pm Sydney time) or consult your stockbroker, solicitor,
accountant or other independent and qualified professional adviser.
On behalf of the Board and management team of BOQ, I invite you to consider this investment opportunity.
Yours sincerely,
Neil Summerson
Chairman
BOQ CPS PROSPECTUS 2012
4
KEY DATES
DATE
Lodgement of the original Prospectus with ASIC
7 November 2012
Record date for determining Eligible Shareholders for Shareholder Offer
7:00pm, 9 November 2012
Bookbuild
16 November 2012
Announcement of the Margin and lodgement of replacement Prospectus with ASIC
19 November 2012
Opening Date
19 November 2012
Annual General Meeting (approval of CPS issue, CPS Terms and PEPS buy-back)
Closing Date for the Reinvestment Offer, Shareholder Offer, Broker Firm Offer applications in respect of Reinvested
PEPS and General Offer
13 December 2012
Closing Date for the Broker Firm Offer (excluding applications in respect of Reinvested PEPS)
5:00pm, 18 December 2012
Issue Date
24 December 2012
CPS commence trading on ASX (deferred settlement basis)
27 December 2012
Expected despatch of Holding Statements
28 December 2012
CPS commence trading on ASX (normal settlement basis)
31 December 2012
KEY DATES FOR CPS
DATE
Record Date for first Dividend
27 March 2013
For personal use only
KEY DATES FOR THE OFFER
5:00pm, 13 December 2012
First semi-annual Dividend Payment Date1
15 April 2013
Optional Conversion/Redemption Date
15 April 2018
2
Scheduled Mandatory Conversion Date3
15 April 2020
KEY DATES FOR PEPS HOLDERS
DATE
PEPS Record Date for determining Eligible PEPS Holders for Reinvestment Offer
(relevant PEPS must also be held on the Reinvested PEPS Buy-back Date for the Reinvestment Offer)
7:00 pm, 9 November 2012
Opening Date for the Reinvestment Offer
19 November 2012
Closing Date for the Reinvestment Offer
5:00pm, 13 December 2012
Closing Date for the Broker Firm Offer applications in respect of Reinvested PEPS
5:00pm, 13 December 2012
Record date for Pro-Rata Dividend payment for Reinvested PEPS
7:00pm, 13 December 2012
Number of Reinvested PEPS confirmed and announced
18 December 2012
Reinvested PEPS Buy-back Date
24 December 2012
Issue Date for CPS
24 December 2012
Payment despatched for Pro-Rata Dividend for Reinvested PEPS
24 December 2012
DATES MAY CHANGE
These dates are indicative only and are subject to change without notice. References to time are to Sydney time.
BOQ and the Joint Lead Managers may agree to vary the timetable, including extending any Closing Date, closing the Offer early without notice or
accepting late Applications, whether generally or in particular cases, at their discretion. BOQ may withdraw the Offer at any time before CPS are issued.
Accordingly, you are encouraged to apply as soon as possible after the Opening Date.
QUOTATION OF CPS ON ASX
BOQ has applied to ASX for CPS to be quoted on ASX and CPS are expected to trade under ASX code “BOQPD”. Quotation of CPS is not guaranteed.
If ASX does not grant permission for CPS to be quoted, then CPS will not be issued and all Application Payments will be refunded (without interest)
to Applicants as soon as practicable.
MAKING AN APPLICATION
For information on who is eligible to apply for CPS under the Offer and how to make an Application – see Section 6 for full details.
1
Dividends are expected to be paid semi-annually subject to certain payment conditions being satisfied (the Dividend Payment Tests) – see Section 2.3.
2CPS Holders should not expect that APRA’s prior written approval for any such Conversion, Redemption or Transfer will be given. 15 April 2018 is not currently a Business Day so, under the CPS
Terms, an Early Conversion, Redemption or Transfer would be executed on the next Business Day, 16 April 2018.
3
5
Conversion of CPS to Ordinary Shares on this date is subject to satisfaction of the Conversion Conditions – see Section 2.4.
BOQ CPS PROSPECTUS 2012
For personal use only
1
INVESTMENT
OVERVIEW
BOQ CPS PROSPECTUS 2012
6
1. INVESTMENT OVERVIEW
This Section provides a summary of information that is key to a decision whether to invest in CPS. Further details are provided in other Sections of this
Prospectus which you should read in its entirety.
For personal use only
1.1 Key Features of the Offer and CPS
TOPIC
SUMMARY
FURTHER
INFORMATION
What is the Offer?
ıı
T he Offer is for the issue of CPS at a Face Value of $100 each to raise
approximately $250 million with the ability to raise more or less.
Section 6.1
Who can apply?
ıı
The Offer is being made to:
Section 6.2
Institutional Investors;
––
Broker Firm Applicants;
––
Eligible PEPS Holders;
––
Eligible Shareholders; and
––
General Applicants.
Who is the issuer?
ıı
The issuer is Bank of Queensland Limited.
Section 3
What are CPS?
ıı
PS are fully paid preference shares issued by BOQ that rank in priority to
C
Ordinary Shares for dividends and on winding up. BOQ may issue other
securities that rank equally with, or ahead of, CPS for dividends or on winding
up (which therefore could take priority over CPS).
Section 2.1
ıı
T he CPS Terms are complex and are designed to meet the detailed capital
requirements which APRA applies to these instruments. BOQ’s ability to
pay Dividends, or to optionally Convert, Redeem or Transfer the CPS, are
dependent on APRA either not objecting or giving prior approval.
ıı
B OQ has applied to ASX for CPS to be quoted on ASX. If quoted, CPS can be
bought or sold on ASX. There is no guarantee of a liquid market for CPS or the
price at which CPS may trade.
ıı
B OQ is issuing CPS to raise funds in a manner that creates regulatory capital
that satisfies APRA’s prudential capital requirements.
ıı
T he proceeds of the CPS will be used for BOQ’s general corporate purposes
including effecting the buy-back of PEPS under the Reinvestment Offer and
providing BOQ with further capacity for continued growth.
ıı
PS are not guaranteed by BOQ or secured in any way against any asset
C
of BOQ.
ıı
PS do not represent a deposit liability of BOQ and are not protected
C
accounts for the purposes of the depositor protection provisions of Australian
banking legislation.
ıı
PS are not guaranteed or insured by any government, government agency
C
or compensation scheme of Australia or any other jurisdiction, or by any
other person.
ıı
BOQ has not sought a credit rating for CPS.
Why is BOQ issuing CPS?
No guarantee or security
Will the CPS have a credit
rating?
7
––
BOQ CPS PROSPECTUS 2012
Section 2.2
Section 2.1.10
Section 2.1.9
For personal use only
Regulatory capital
treatment
Dividends
Will I get my capital back?
When will my CPS
Mandatorily Convert to
Ordinary Shares?
ıı
PS qualify as Non-Innovative Residual Tier 1 Capital under APRA’s current
C
Prudential Standards.
ıı
PS will qualify as Additional Tier 1 Capital from 1 January 2013, which
C
is the date when APRA’s Basel III Prudential Standards are expected to
become effective.
ıı
T he CPS and BOQ’s other regulatory capital help to protect BOQ’s depositors
and other creditors by providing a loss absorbing capital buffer which supports
losses that may be incurred on BOQ’s assets.
ıı
ividends on CPS are discretionary (which means BOQ does not have to pay
D
them) and are subject to the Dividend Payment Tests being satisfied. These
tests include that the Dividend would not result in BOQ breaching APRA’s
regulatory capital guidelines and APRA not otherwise objecting to the payment
of the Dividend.
ıı
ividends are scheduled to be paid semi-annually in arrears on 15 April and
D
15 October and are calculated on a floating rate basis using the 180 day bank
bill swap rate plus the Margin. The Margin is 5.10% per annum as determined
by the Bookbuild.
ıı
ividends are expected to be fully franked. CPS Holders should be aware
D
that the ability of a CPS Holder to use franking credits will depend on their
individual position and that the potential value of franking credits does not
accrue at the same time as the cash Dividend is received.
ıı
If any Dividend payment is not fully franked, CPS Holders will be entitled to an
additional cash payment to compensate for the unfranked amount.
ıı
ividends are non-cumulative, which means that if BOQ does not pay a
D
Dividend on a Dividend Payment Date there is no ability to seek payment of
that Dividend at a future time and no compensation or event of default arises.
ıı
If BOQ does not pay a Dividend on a Dividend Payment Date, subject to some
exceptions, BOQ will be prevented from paying dividends on its Ordinary
Shares until the next Dividend Payment Date for CPS.
ıı
PS are perpetual and have no maturity date. CPS could remain on issue
C
indefinitely if CPS are not Converted or Redeemed.
ıı
hat will happen to the CPS is therefore uncertain and depends on a number
W
of factors including whether Mandatory Conversion occurs, whether BOQ elects
to Convert, Redeem or Transfer CPS when permitted under the CPS Terms
and whether APRA approval is given to any such Conversion, Redemption
or Transfer.
ıı
CPS Holders do not have a right to require Conversion, Redemption or Transfer.
ıı
PS are expected to be quoted on ASX. If quoted on ASX, CPS can be bought
C
or sold on ASX. There is no guarantee of a liquid market for CPS or the price
at which CPS may trade and whether CPS Holders will be able to recover their
capital by selling on market.
ıı
PS will Mandatorily Convert to Ordinary Shares on 15 April 2020 if the
C
Conversion Conditions are satisfied, unless CPS are Redeemed or Converted
earlier in accordance with the CPS Terms.
Section 2.2.4
Section 2.3
Section 2.1.6
Section 2.5
BOQ CPS PROSPECTUS 2012
8
1. INVESTMENT OVERVIEW
For personal use only
What are the Conversion
Conditions?
When can the CPS be
optionally Converted,
Redeemed or Transferred?
Conversion on a Capital
Trigger Event or NonViability Trigger Event
ıı
T he Conversion Conditions are based on the price and continuing quotation of
Ordinary Shares. The price of the Ordinary Shares needs to be above a certain
level for the Conversion Conditions to be satisfied. The Conversion Conditions
are intended to protect CPS Holders against receiving on Conversion of CPS
a number of Ordinary Shares that would be worth less than $101.01 per CPS
(although, because Ordinary Share prices fluctuate on ASX, by the time any
Conversion actually occurs the value of Ordinary Shares received may be more
or less than $101.01).
Section 2.4.3
ıı
S ubject to APRA’s prior written approval, BOQ may elect to Convert (subject
to the Conversion Conditions being satisfied), Redeem or Transfer (or
some combination of these) all or some CPS on the Optional Conversion/
Redemption Date of 15 April 2018.
Section 2.8 and 2.9
ıı
S ubject to APRA’s prior written approval, BOQ may elect to Convert (subject
to the Conversion Conditions being satisfied), Redeem or Transfer all or some
CPS if certain events occur. These events include higher tax costs than
expected being incurred by BOQ and certain unexpected regulatory changes
occurring which have an adverse effect, such as the CPS no longer qualifying
as Tier 1 Capital.
ıı
B OQ must Convert (subject to the Conversion Conditions being satisfied) all
CPS following an Acquisition Event, which is a successful takeover of BOQ.
ıı
hen under the CPS Terms BOQ has a choice as to whether to Convert,
W
Redeem or Transfer, that choice will be made by BOQ in its absolute discretion.
If BOQ elects to cause the Transfer of CPS to a Nominated Transferee, this will
be at the same price that would apply to a Redemption.
ıı
PS Holders should not expect that APRA’s prior written approval for any such
C
Conversion, Redemption or Transfer will be given.
ıı
PS will Convert to Ordinary Shares if at any time BOQ’s ratio of Common
C
Equity Tier 1 Capital (before 1 January 2013, Fundamental Tier 1 Capital) to
total risk weighted assets falls to, or below, 5.125%, calculated on a Level 1 or
Level 2 basis.
ıı
A t 31 August 2012, BOQ’s Fundamental Tier 1 Capital to total risk-weighted
assets was 8.5% under the current APRA Prudential Standards. BOQ estimates
that, as at 31 August 2012, its Common Equity Tier 1 Capital Ratio would be
8.6% based on APRA’s Basel III Prudential Standards4, which equates to a
surplus of capital of approximately A$736.5 million above the Capital Trigger
Event level of 5.125%.
ıı
PS will also Convert to Ordinary Shares if at any time APRA has determined
C
that CPS and other Relevant Tier 1 Capital Instruments (i.e. other Tier 1 Capital
instruments which can be converted or written off in a similar way to CPS)
must be converted or written off because without conversion, write off or a
public sector injection of capital (or equivalent capital support) BOQ would
become, in APRA’s opinion, non-viable.
ıı
In each case, Conversion is not subject to the Conversion Conditions being
satisfied. The number of Ordinary Shares a CPS Holder will receive is capped
at the Maximum Conversion Number. As a result, CPS Holders may receive a
number of Ordinary Shares worth significantly less than $101.01 for each CPS
that they held.
4BOQ only discloses Common Equity Tier 1 Capital at Level 2. The difference between the calculation at Level 1 and Level 2 is not material.
9
BOQ CPS PROSPECTUS 2012
Section 2.6 and 2.7
For personal use only
Write Off of CPS
Where do CPS rank in a
winding up of BOQ?
Is Shareholder approval
required?
ıı
If a Capital Trigger Event or Non-Viability Trigger Event occurs and BOQ cannot
for any reason Convert CPS within five days after the relevant event, the rights
of CPS in respect of dividends and return of capital will be automatically
changed. As a result, a CPS Holder would in effect have, in respect of the CPS,
the same rights to dividends and capital return as a person holding the number
of Ordinary Shares the CPS Holder would have held if the Conversion had
occurred.
ıı
In the CPS Terms and this Prospectus, this change is referred to as CPS being
“Written Off”.
ıı
In a winding up of BOQ, CPS rank for payment of capital ahead of Ordinary
Shares, equally with PEPS and other securities or instruments ranking equally
with CPS, but behind all other securities or instruments ranking ahead of CPS,
and behind all depositors and other creditors of BOQ.
ıı
If there is a shortfall of funds on a winding up of BOQ to pay all amounts
ranking ahead or equally with CPS, CPS Holders will lose all or some of
their capital.
ıı
A ny return in a winding up may be adversely affected if your CPS have been
Converted or Written Off as a result of a Capital Trigger Event or a Non-Viability
Trigger Event.
ıı
A fter Conversion, CPS Holders become holders of Ordinary Shares and will
rank equally with all other Ordinary Shareholders in a winding up.
ıı
A fter a Write Off, the rights of a CPS to any return of capital in a winding up are
broadly equivalent to the rights of the Ordinary Shares the CPS Holder would
have held if Conversion of the CPS had occurred.
Higher
ranking
Section 2.6.6 and 2.7.6
Section 2.10 and 4.2.14
Illustrative examples
Preferred and
secured debt
Liabilities in Australia in relation to protected
accounts (generally savings accounts and term
deposits), liabilities preferred by law including
employee entitlements and secured creditors
Unsubordinated and Unsubordinated and unsecured bonds and
unsecured debt
notes, trade and general creditors
Subordinated and
unsecured debt
Subordinated and unsecured debt obligations
Preference
securities
CPS, PEPS and any BOQ securities or
instruments expressed to rank equally
Ordinary shares
BOQ Ordinary Shares
Lower
ranking
This diagram and the descriptions are simplified and illustrative only, and do not
include every type of security or obligation that may be issued or entered into by
BOQ, or every potential claim against BOQ in a winding up. BOQ will from time to
time issue additional securities or incur other obligations that rank ahead of, equally
with or subordinated to, CPS.
ıı
T he Offer is conditional on shareholder approvals to be proposed at the BOQ
AGM on 13 December 2012, including approval of the CPS Terms, the issue
of the CPS under the ASX Listing Rules and the buy-back of PEPS under the
Reinvestment Offer.
Sections 2.11.7 and 2.11.8
BOQ CPS PROSPECTUS 2012
10
1. INVESTMENT OVERVIEW
1.2 BOQ and its Business Model
SUMMARY
FURTHER
INFORMATION
Bank of Queensland Limited
ıı
B OQ provides banking and insurance services primarily to retail customers
and small to medium sized business. The principal activities of BOQ and
its controlled entities are the provision of a range of personal and business
banking services and insurance. Insurance services are provided through
St Andrew’s Insurance.
Section 3
ıı
B OQ’s Ordinary Shares and PEPS are quoted on the ASX and BOQ currently
ranks among the top 100 companies by market capitalisation on the ASX.
ıı
B OQ operates retail branches, business banking centres and equipment,
debtor and vendor finance centres throughout Australia and New Zealand
and distributes insurance. BOQ is a member of the rediATM shared
automated teller machine (ATM) network, which operates over 3,300 ATMs
throughout Australia.
ıı
B OQ’s operating model incorporates three business lines: Banking (Retail and
Business and Agribusiness Banking), BOQ Finance and St Andrew’s Insurance.
ıı
B OQ’s retail banking arm offers a comprehensive product offering which
encompasses transactional and saving accounts, mortgage and personal
lending and credit card products.
ıı
B OQ’s business banking arm specialises in the small to medium enterprise
(SME) sector and offers a suite of products including transactional accounts,
foreign exchange hedging, merchant services and lending products such as
overdrafts, commercial loans and trade finance facilities.
ıı
BOQ Finance provides equipment and debtor financing.
ıı
St Andrew’s Insurance provides consumer credit insurance and life insurance.
ıı
ue to increased provisioning during the full year ended 31 August 2012,
D
BOQ incurred a statutory full year loss after tax of $17.1 million. However
for the half year ended 31 August 2012, BOQ recorded a net profit after tax of
$73.5 million.
ıı
BOQ as at 31 August 2012:
For personal use only
TOPIC
11
BOQ CPS PROSPECTUS 2012
––
Had total assets under management of $41.8 billion;
––
Had an estimated Common Equity Tier 1 Capital Ratio of 8.6% based on
APRA’s Basel III Prudential Standards that are expected to come into effect
on 1 January 2013, and a reported Tier 1 Capital Ratio of 9.5% under
current Prudential Standards.
1.3 Key Risks Associated with cps and boq
For personal use only
Before applying for CPS, you should consider whether CPS are a suitable investment for you. There are risks associated with an investment in CPS and in
BOQ, many of which are outside the control of BOQ and its Directors. The following section is a summary of the key risks. A full description of these and other
risks is in Section 4 which you should read in its entirety.
TOPIC
SUMMARY
FURTHER
INFORMATION
1.3.1 Key risks associated with an investment in CPS
Market price of CPS
ıı
T he price at which CPS Holders are able to sell CPS on ASX is uncertain. It is
possible that CPS may trade at a market price below their Face Value of $100.
ıı
T he market price of CPS may fluctuate due to various factors including investor
perceptions, general financial market conditions, the availability of better
rates of return on other securities and factors that may affect BOQ’s financial
performance or position.
ıı
nlike Ordinary Shares, CPS do not provide exposure to growth in
U
BOQ’s business.
ıı
There may be no liquid market for CPS and that market may be volatile.
ıı
PS Holders who wish to sell their CPS may be unable to do so at an
C
acceptable price, or at all.
Ranking of Ordinary Shares
ıı
T he Ordinary Shares held as a result of any Conversion will, following
Conversion, rank equally with existing Ordinary Shares. Accordingly, the
ongoing value of any Ordinary Shares received upon Conversion will depend
upon the market price of Ordinary Shares after the date on which CPS are
Converted. That market may also be volatile depending on securities markets
conditions at that time.
Section 4.2.2
Fluctuation in Ordinary
Share price
ıı
T he market price of Ordinary Shares may fluctuate due to various factors,
including investor perceptions, Australian and worldwide economic conditions,
BOQ’s financial performance and position and transactions affecting the share
capital of BOQ. As a result, the value of Ordinary Shares received by CPS
Holders may be greater than or less than CPS Holders anticipated.
Section 4.2.3
ıı
A fter Conversion of CPS, CPS Holders may wish to sell their Ordinary Shares
which may have a negative effect on the trading price of Ordinary Shares.
ıı
ividends will fluctuate (both increasing and decreasing) over time as a result
D
of movements in the Bank Bill Swap Rate.
ıı
T here is a risk that Dividends may become less attractive when compared to the
returns available on comparable securities or investments.
Liquidity
Changes in Dividends
Section 4.2.1
Section 4.2.1
Section 4.2.4
BOQ CPS PROSPECTUS 2012
12
1. INVESTMENT OVERVIEW
For personal use only
Dividends may not be paid
Dividends may not be fully
franked
Restrictions on rights and
ranking in a winding up of
BOQ
It is not certain whether
and when CPS may be
Converted, Redeemed or
Transferred
13
BOQ CPS PROSPECTUS 2012
ıı
T here is a risk that Dividends will not be paid on CPS, including where the
Directors decide not to pay a Dividend or where APRA objects to the Dividend
payment.
ıı
ividends are non-cumulative. If BOQ does not pay a scheduled Dividend, a
D
CPS Holder has no entitlement to that Dividend.
ıı
If for any reason a scheduled Dividend has not been paid in full on the relevant
Dividend Payment Date, then, subject to some exceptions, the Distribution
Restriction will apply to prevent payment of dividends on Ordinary Shares until
a CPS Dividend is next paid.
ıı
A failure to pay a scheduled Dividend will not constitute an event of default and
a CPS Holder has no right to apply for BOQ to be wound up and will have no
right of set-off or offsetting rights or claim on BOQ.
ıı
R estrictions arising under other securities may prevent Dividends being paid
on CPS.
ıı
A s the Distribution Restriction on the CPS is less extensive than the
corresponding distribution restriction in the PEPS, a failure to make a
scheduled payment on CPS may not restrict the making of payments in respect
of the PEPS and other instruments that may in the future rank equally with CPS.
ıı
B OQ currently expects Dividends to be fully or substantially franked. However,
there is no guarantee that BOQ will have sufficient franking credits in the future
to fully frank Dividends.
ıı
If a Dividend is unfranked or partially franked, the Dividend will be increased
to compensate for the unfranked component, subject to the Dividend Payment
Tests.
ıı
T he value and availability of franking credits to a CPS Holder will differ
depending on the CPS Holder’s personal tax circumstances.
ıı
In a winding up of BOQ, CPS rank for payment of capital ahead of Ordinary
Shares, equally with PEPS and other securities or instruments ranking equally
with CPS, but behind all securities or instruments ranking ahead of CPS and
behind all depositors and other creditors of BOQ.
ıı
If there is a shortfall of funds on a winding up of BOQ to pay all amounts
ranking ahead of or equally with CPS, CPS Holders will lose all or some of
their capital.
ıı
A ny return in a winding up may be adversely affected if your CPS have been
Converted or Written Off as a result of a Capital Trigger Event or Non-Viability
Trigger Event.
ıı
T o understand the potential effect on the assets of BOQ available to meet the
claims of a CPS Holder in a winding up of BOQ if there is a replacement of
BOQ as the ultimate holding company of the BOQ Group and the successor
holding company is an Approved NOHC, see Section 2.11.6. CPS Holders do
not have any claim on the assets of an Approved NOHC other than following
Conversion as a holder of ordinary shares in the Approved NOHC.
ıı
T here are a number of scenarios in which CPS may be Converted, Redeemed
or Transferred. It is uncertain whether and when Conversion, Redemption or
Transfer may occur. The timing of any Conversion, Redemption or Transfer may
not suit CPS Holders.
ıı
CPS are perpetual and may not Convert or be Redeemed or Transferred at all.
Sections 4.2.5, 4.2.7 and 4.2.8
Section 4.2.6
Section 4.2.9
Section 4.2.10, 4.2.11, 4.2.12
and 4.2.13
ıı
T here is a risk that Conversion will not occur on the Scheduled Mandatory
Conversion Date because the Conversion Conditions are not satisfied.
Mandatory Conversion may therefore not occur when scheduled or at all.
Section 4.2.10
Conversion on account of
a Capital Trigger Event or
Non-Viability Trigger Event
ıı
T he Conversion Conditions do not apply on a Capital Trigger Event or NonViability Trigger Event. If Conversion occurs following such an event, you may
receive significantly less than $101.01 worth of Ordinary Shares per CPS.
Section 4.2.14
ıı
If on a Capital Trigger Event or Non-Viability Trigger Event, BOQ is prevented
from Converting CPS, your CPS will be Written Off.
ıı
B OQ may in certain circumstances amend the CPS Terms without the approval
of CPS Holders. These include necessary or desirable amendments to dates
and time periods to facilitate any Conversion or any other change which BOQ
considers not likely to be materially prejudicial to the interests of CPS Holders
as a whole. BOQ may also amend the CPS Terms if the amendment has been
approved by a Special Resolution. Amendments which may affect the treatment
of CPS as Additional Tier 1 Capital require APRA’s prior written approval.
ıı
A mendments under these powers are binding on all CPS Holders despite the
fact that a CPS Holder may not agree with the amendment.
For personal use only
Mandatory Conversion may
not occur on the Scheduled
Mandatory Conversion Date
Amendment of CPS Terms
Section 4.2.22
1.3.2 Key risks associated with an investment in BOQ
Market risk
Credit and impairment
ıı
ovements in market rates, prices or credit spreads may result in a loss of
M
earnings to BOQ.
ıı
ver-reliance on a particular funding source, including securitisation, may
O
affect the volatility in the cost or availability to BOQ of funds.
ıı
B OQ is subject to interest rate risks that arise from a variety of sources,
including mismatches between the repricing periods of its financial assets and
liabilities.
ıı
T here is a risk of loss of earnings due to adverse movements in foreign
exchange rates for BOQ.
ıı
B OQ’s counterparties may be unable to honour their contractual obligations
to BOQ and default on their obligations due to bankruptcy, lack of liquidity,
operational failure or other reasons.
ıı
A s a financial institution, BOQ is exposed to the risks associated with
extending credit to other parties.
ıı
redit risk is the risk of financial loss arising from a debtor or counterparty
C
failing to meet their contractual debts and obligations or the failure to recover
the recorded value of secured assets.
ıı
R ecent market and economic conditions have led to significantly increased
impairment charges for BOQ in 2012, and if these conditions deteriorate
further, some customers and counterparties may experience continued higher
levels of financial stress.
Section 4.3.1
Section 4.3.2
BOQ CPS PROSPECTUS 2012
14
1. INVESTMENT OVERVIEW
For personal use only
The real estate market in
Australia and Queensland
Liquidity
Operational risk
Reliance on external parties
Changes in regulation and
government policy
Mergers and acquisitions
15
BOQ CPS PROSPECTUS 2012
ıı
A further decrease in property valuations in Australia, and in Queensland in
particular, could decrease the amount of new lending BOQ is able to write or
increase the losses that BOQ may experience from existing loans, which, in
either case, could materially and adversely impact BOQ’s financial condition
and results of operations.
ıı
A continued significant slowdown in the Australian or Queensland housing
market could adversely affect BOQ’s business, operations and financial
condition.
ıı
A s a result of mismatches in its cash flows from financial transactions BOQ
may be unable to meet its financial obligations.
ıı
L iquidity risk is managed through a series of detailed policies, including the
management of cash flow mismatches, the maintenance of a stable, core retail
deposits base, the diversification of the funding base and the retention of
adequate levels of High Quality Liquid Assets. BOQ’s liquidity risk management
framework models its ability to fund under both normal conditions and during
a crisis situation.
ıı
owever, any uncertainty in the availability of funding from financial markets
H
may increase liquidity risks to BOQ and financial institutions generally under
both normal conditions and during a crisis situation.
ıı
perational risk is the risk of loss, other than those captured in the credit and
O
market risk categories, resulting from inadequate or failed internal processes,
people or systems, or from external events.
ıı
B OQ is exposed to a variety of risks including those arising from process
error, fraud, technology failure, security and physical protection, franchise
agreements entered into with owners of OMBs, customer services, staff skills
and performance and product development and maintenance.
ıı
B OQ’s operations depend on performance by a number of external parties under
contractual arrangements with BOQ.
ıı
A s at 31 August 2012, approximately 70% of BOQ’s branches are OwnerManaged Branches™ (OMB®). Non-performance of contractual obligations
and poor operational performance of OMBs may have an adverse effect on
BOQ’s business and financial performance.
ıı
B OQ is subject to extensive laws and regulations in Australia, and is also
supervised by a number of different regulatory authorities (including APRA).
Failure to comply with legal and regulatory requirements may have a material
adverse effect on BOQ and its reputation among customers and regulators and
in the market.
ıı
hanges to laws, regulations, policies or accounting standards, including
C
changes in interpretation or implementation of laws, regulations, policies or
accounting standards, could affect BOQ in substantial and unpredictable ways.
ıı
B OQ may engage in merger or acquisition activity which facilitates BOQ’s
strategic direction. Whilst BOQ recognises that benefits may arise from merger
or acquisition activities, significant risks exist in both the execution and
implementation of such activities.
ıı
B OQ’s failure to adequately manage the risks associated with any mergers or
acquisitions could adversely affect BOQ’s businesses, financial performance,
financial condition and prospects.
Section 4.3.3
Section 4.3.4
Section 4.3.5
Section 4.3.7
Section 4.3.8
Section 4.3.14
BOQ’s growth strategy
R isks that relate to BOQ’s growth strategy are interrelated and include risk of
local market saturation, risks associated with geographical diversification,
changes in wholesale funding markets and changes in general economic
conditions.
ıı
espite the size of the Queensland market, BOQ faces the challenge of
D
maintaining a high penetration rate in that market in order to achieve continued
growth.
ıı
T hrough a combination of mergers and organic growth in other states, BOQ has
expanded its geographical presence and distribution in Australia. This brings
challenges to BOQ’s management and control systems as it develops as a more
geographically diverse organisation.
ıı
eneral economic conditions may worsen which could stifle credit growth and
G
restrict BOQ’s ability to grow in line with its growth strategy.
ıı
T here is substantial competition for the provision of financial services in the
markets in which BOQ operates. The effect of competitive market conditions
may adversely impact the earnings and assets of BOQ.
ıı
R eputation risk may arise through the actions of BOQ and adversely affect
perceptions of BOQ held by the public, shareholders, regulators or rating
agencies.
ıı
amage to BOQ’s reputation may have an adverse impact on BOQ’s financial
D
performance, capacity to source funding and liquidity, cost of sourcing funding
and liquidity and by constraining business opportunities.
Credit ratings
ıı
T he credit ratings assigned to BOQ by rating agencies are based on an
evaluation of a number of factors, including its financial strength. If BOQ fails
to maintain its current corporate credit ratings, this could adversely affect its
cost of funds and related margins, liquidity, competitive position and access to
capital markets.
Section 4.3.17
Exposure to the broader
economy
ıı
B OQ’s business is exposed to changes in economic conditions in Australia
and Queensland in particular and other factors such as instability in offshore
markets, natural disasters and potential for or actual conflict occurring around
the world may also adversely affect domestic and global financial markets.
Sections 4.3.19 and 4.3.23
ıı
A major systemic shock, similar to that experienced recently in Europe, could
occur that causes an adverse impact on the Australian and New Zealand
financial systems.
For personal use only
ıı
Reputation
Sections 4.3.11 and 4.3.13
Section 4.3.16
BOQ CPS PROSPECTUS 2012
16
1. INVESTMENT OVERVIEW
1.4 Reinvestment Offer for Peps Holders
For personal use only
This Section sets out information for current holders of PEPS, who may be eligible to apply under the Reinvestment Offer to reinvest their PEPS in CPS.
TOPIC
SUMMARY
FURTHER
INFORMATION
What are PEPS?
ıı
P EPS are perpetual equity preference shares issued by BOQ in 2007 that trade
on ASX under the code “BOQPC”.
Section 5.1.1
What is the Reinvestment
Offer?
ıı
nder the Reinvestment Offer, Eligible PEPS Holders are invited to offer some
U
or all of their PEPS registered on 9 November 2012 for sale to BOQ through a
selective buy-back for $100 each on 24 December 2012.
Section 5.1.3
ıı
B uy-back proceeds will be directly applied to the Application Payment for CPS
($100 per CPS).
ıı
T he reinvestment mechanism is described in Section 5, including steps that
Eligible PEPS Holders authorise BOQ to take on their behalf when they apply to
reinvest their PEPS.
ıı
P EPS will not fully count as Tier 1 Capital from 1 January 2013. APRA has
granted transitional relief so PEPS can be included in Additional Tier 1 Capital
on a reducing basis over time.
ıı
B OQ will not redeem the PEPS on their first optional call date of 17 December
2012.
ıı
T he Board has determined to offer Eligible PEPS Holders the ability to
exchange their PEPS for CPS.
ıı
To participate in the Reinvestment Offer, you must:
What is the purpose of the
Reinvestment Offer?
Who is eligible to
participate in the
Reinvestment Offer?
17
BOQ CPS PROSPECTUS 2012
––
be a registered holder of PEPS on 9 November 2012;
––
be shown on the PEPS register as having an address in Australia or
New Zealand; and
––
not be in the United States or be acting as a nominee for a person in
the United States,
(Eligible PEPS Holder).
ıı
If you are an Eligible PEPS Holder and elect for any PEPS to be reinvested in
CPS (Reinvested PEPS), a holding lock will be placed on those Reinvested
PEPS preventing you from dealing with those Reinvested PEPS until the Issue
Date for the Offer. You must hold your Reinvested PEPS on the Reinvested
PEPS Buy-back Date of 24 December 2012.
Section 5.6
Section 5.1.4
For personal use only
If I am an Eligible PEPS
Holder, what are my
options?
ıı
If you are an Eligible PEPS Holder, in addition to reinvesting your PEPS in
CPS, you have a number of other choices.
ıı
If you are an Eligible PEPS Holder you may wish to:
––
reinvest all of the PEPS registered in your name on 9 November 2012
in CPS;
––
reinvest all of the PEPS registered in your name on 9 November 2012 and
apply for additional CPS;
––
reinvest some, but not all, of the PEPS registered in your name on
9 November 2012 in CPS, in which case you will continue to hold the
balance of your PEPS, which BOQ will not redeem on the first optional
call date of 17 December 2012;
––
take no action and continue to hold PEPS, which BOQ will not redeem on
the first optional call date of 17 December 2012; or
––
sell PEPS on market through your broker.
Section 5.2
ıı
Ineligible PEPS Holders are limited to the choices set out in Section 5.2.2.
ıı
If you are an Eligible PEPS Holder and own 50 PEPS or fewer, you must apply
to reinvest all your PEPS in CPS if you wish to participate in the
Reinvestment Offer.
ıı
If you are an Eligible PEPS Holder and own more than 50 PEPS, you must
apply for a minimum number of 50 CPS ($5,000).
ıı
Y ou may wish to apply for more CPS than the number of PEPS that you hold –
but you will have to make an Application Payment for those additional CPS.
ıı
If you are an Eligible PEPS Holder and elect for any PEPS to be reinvested in
CPS, you will receive a Pro-Rata Dividend on your Reinvested PEPS up to but
not including the Reinvested PEPS Buy-back Date.
ıı
T he amount of the Pro-Rata Dividend will be $0.689 per $100 being the 70
days dividend which would have accrued at 3.5910% per annum from and
including 15 October to and including 23 December 2012 in accordance with
the PEPS terms.
ıı
The Pro-Rata Dividend cannot be reinvested in CPS.
ıı
If you are an Eligible PEPS Holder and you apply under the Reinvestment Offer,
you are guaranteed an Allocation of one CPS for every Reinvested PEPS.
ıı
If an Eligible PEPS Holder applies for additional CPS, any Allocation of
additional CPS may be scaled back if there is excess demand.
What are the risks
associated with
participating in the
Reinvestment Offer?
ıı
If you are an Eligible PEPS Holder and you apply under the Reinvestment Offer,
you may receive an allocation of CPS and as such, you will be subject to the
risks associated with an investment in CPS and in BOQ, many of which are
outside the control of BOQ and its Directors.
Section 4
What happens to my PEPS
if I do not participate in the
Reinvestment Offer?
ıı
E ligible PEPS Holders who elect not to participate in the Reinvestment Offer in
full will continue holding PEPS, or the balance of their PEPS not reinvested,
which BOQ will not redeem on the first optional call date of 17 December 2012.
Section 5.2.1
Is there a minimum
Application size for the
Reinvestment Offer?
If I elect to participate in the
Reinvestment Offer, what
dividends will I receive?
Will I receive a guaranteed
allocation of CPS?
Section 5.11.1
Section 5.4
Section 5.3
BOQ CPS PROSPECTUS 2012
18
1. INVESTMENT OVERVIEW
What are the risks of not
fully participating in the
Reinvestment Offer?
T here is no guarantee that BOQ will redeem PEPS at a future date and PEPS
Holders have no right to require BOQ to redeem PEPS.
ıı
F ollowing the Reinvestment Offer, it is anticipated that the number of PEPS on
issue will decline as a result of the buy-back of PEPS. This may lead to a less
liquid market for the PEPS that remain outstanding, which could negatively
impact the ability for remaining PEPS Holders to sell their PEPS on-market at
an acceptable price, or at all.
ıı
If you hold both CPS and PEPS you will hold two securities with different issue
terms and different risk profiles.
ıı
If there is an insufficient number and spread of PEPS Holders after completion
of the Reinvestment Offer, ASX has discretion to remove PEPS from official
quotation.
What are the tax
implications of having my
PEPS bought back?
ıı
Y ou should obtain your own tax advice regarding the implications of the buyback of your PEPS, having regard to your individual circumstances.
ıı
A general description of the Australian taxation consequences for PEPS
Holders upon the buy-back of their PEPS is set out in Section 7, including
the capital gains tax (CGT) implications for Eligible PEPS Holders of the
buy-back of PEPS under the Reinvestment Offer. Selling your PEPS into the
Reinvestment Offer may lead to a capital gain or loss or be neutral for CGT
purposes depending on the cost base of your PEPS and your personal tax
circumstances.
Where can I find more
information about the
Reinvestment Offer?
ıı
If you have any questions in relation to the Reinvestment Offer, please contact
your Syndicate Broker or call the BOQ Offer Information Line on 1800 779 639
(within Australia) or +61 2 8280 7626 (outside Australia) (Monday to Friday –
8:30am to 7:30pm Sydney time).
For personal use only
ıı
19
BOQ CPS PROSPECTUS 2012
Section 5.8
Section 7
For personal use only
1.5 What Should You Do?
TOPIC
SUMMARY
Read this Prospectus in full
ıı
Determine if you are
eligible to apply
Consider and consult
Complete and submit your
Application Form
ıı
ıı
If you are considering applying for CPS under the Offer, this document is
important and should be read in its entirety, paying particular attention to the:
––
important notices on the inside front cover;
––
key features of the CPS in Section 2;
––
information about BOQ in Section 3;
––
investment risks in Section 4; and
––
CPS Terms in Appendix A.
FURTHER
INFORMATION
Sections 2, 3 and 4,
Appendix A
A copy of this Prospectus can be:
––
downloaded from the BOQ website at www.boq.com.au; or
––
for General Applicants – sent to you if you register online to receive a
Prospectus on the website above before the Opening Date; or
––
sent to you if you call the BOQ Offer Information Line (Monday to Friday,
8:30am to 7:30pm Sydney time) on 1800 779 639 (within Australia) or
+61 2 8280 7626 (outside Australia); or
––
obtained from your Syndicate Broker if you are a Broker Firm Applicant.
The Offer is being made to:
––
Institutional Investors – through the Institutional Offer;
––
Australian and New Zealand resident retail and high net worth clients of
Syndicate Brokers – through the Broker Firm Offer;
––
Eligible PEPS Holders on the register as at 9 November 2012 – through
the Reinvestment Offer and, where applicable, through the Broker Firm
Offer; and
––
Eligible Shareholders on the register as at 9 November 2012 – through
the Shareholder Offer; and
––
members of the general public who are resident in Australia and New
Zealand – through the General Offer.
ıı
S ubject to BOQ’s approval, CPS may also be offered (as part of any Offer
category) in certain permitted jurisdictions outside Australia or New Zealand
where such offer is made, and accepted, in accordance with the laws of
such jurisdictions.
ıı
onsider all risks and other information regarding an investment in CPS
C
in light of your particular investment objectives and financial situation and
particular circumstances.
ıı
If you do not understand any part of this Prospectus, or are in any doubt as to
whether to invest in CPS or not, it is recommended that you seek professional
guidance from your stockbroker, solicitor, accountant or other independent and
qualified professional adviser before deciding whether to invest.
ıı
The Application process varies depending on whether you participate in the
Institutional Offer, Broker Firm Offer, Reinvestment Offer, Shareholder Offer or
General Offer.
ıı
The Offer may close early so you are encouraged to consider submitting your
Application as soon as possible after the Opening Date.
Section 6.2
Section 4
Section 6.4
BOQ CPS PROSPECTUS 2012
20
For personal use only
21
ABOUT CPS
BOQ CPS PROSPECTUS 2012
2
2. ABOUT CPS
2.1 Introductory Description
SUMMARY
FURTHER
INFORMATION
2.1.1 Who is the issuer?
ıı
The issuer is Bank of Queensland Limited.
Section 3
ıı
BOQ is listed on the Australian Securities Exchange under the code “BOQ”.
ıı
PS are fully paid preference shares issued by BOQ that rank in priority to
C
Ordinary Shares for dividends and on winding up. BOQ may issue other
securities that rank equally with, or ahead of, CPS for dividends or on winding
up (which therefore could take priority over CPS).
ıı
PS will Mandatorily Convert into Ordinary Shares on 15 April 2020 if
C
the Conversion Conditions are satisfied, unless the CPS are Redeemed or
Converted earlier in accordance with the CPS Terms.
ıı
T he CPS Terms are complex and are designed to meet the detailed capital
requirements which APRA applies to these instruments. BOQ’s ability to
pay Dividends, or to optionally Convert, Redeem or Transfer the CPS, are
dependent on APRA either not objecting or giving prior approval.
ıı
T he Offer is for the issue of CPS at a Face Value of $100 each to raise
approximately $250 million with the ability to raise more or less.
ıı
The Offer consists of:
For personal use only
TOPIC
2.1.2 What are CPS?
2.1.3 What is the Offer?
2.1.4 What am I required
to pay?
2.1.5 Why is BOQ issuing
CPS?
––
Institutional Offer;
––
Broker Firm Offer;
––
Reinvestment Offer;
––
Shareholder Offer; and
––
General Offer.
ıı
The Face Value is $100 per CPS.
ıı
A pplications must be for a minimum of 50 CPS ($5,000), except for
Applications from Eligible PEPS Holders which may be smaller in certain
circumstances (see Section 5.11.1). If your Application is for more than 50
CPS, then you must apply in incremental multiples of 10 CPS – that is, for
incremental multiples of at least $1,000.
ıı
onies payable on each application are calculated as the number of CPS
M
applied for multiplied by the Face Value (Application Payment).
ıı
B OQ is issuing CPS to raise funds in a manner that creates regulatory capital
that satisfies APRA’s prudential capital requirements.
ıı
T he proceeds of the CPS will be used for BOQ’s general corporate purposes
including effecting the buy-back of PEPS under the Reinvestment Offer and
providing BOQ with further capacity for continued growth.
Section 2.5
Section 6.1 and 6.2
Section 6.4
Section 2.2
BOQ CPS PROSPECTUS 2012
22
2. ABOUT CPS
For personal use only
2.1.6 What is the term of
CPS?
2.1.7 How do CPS rank in
relation to other BOQ
instruments?
2.1.8 Will CPS be quoted
on ASX?
23
BOQ CPS PROSPECTUS 2012
ıı
CPS are perpetual and have no maturity date.
ıı
However, CPS will Mandatorily Convert to Ordinary Shares on the earlier of:
ıı
––
15 April 2020 if the Conversion Conditions are satisfied, or otherwise
on the first Dividend Payment Date after 15 April 2020 on which the
Conversion Conditions are satisfied;
––
a Capital Trigger Event occurring at any time;
––
a Non-Viability Trigger Event occurring at any time; or
––
following an Acquisition Event occurring and subject to the Conversion
Conditions being satisfied.
Section 2.4
Subject to APRA’s prior written approval, BOQ may elect to:
––
Convert (subject to the Conversion Conditions being satisfied), Redeem
or Transfer CPS following the occurrence of a Tax Event or Regulatory
Event;
––
Convert (subject to the Conversion Conditions being satisfied), Redeem
or Transfer CPS at its option on the Optional Conversion/Redemption
Date of 15 April 2018; or
––
Convert all of the CPS (subject to the Conversion Conditions being
satisfied) following the occurrence of a Potential Acquisition Event.
ıı
If BOQ elects to cause a Transfer of CPS to a Nominated Transferee, this will be
at the same price as would apply to a Redemption.
ıı
F or the payment of Dividends, CPS rank ahead of Ordinary Shares, equally with
PEPS and other securities or instruments ranking equally with CPS, but behind
all securities or instruments ranking ahead of CPS.
ıı
In a winding up of BOQ, CPS rank ahead of Ordinary Shares, equally with
PEPS and other securities or instruments ranking equally with CPS, but behind
all securities or instruments ranking ahead of CPS, and behind all depositors
and other creditors of BOQ.
ıı
If there is a shortfall of funds on a winding up of BOQ to pay all amounts
ranking ahead of or equally with CPS, CPS Holders will lose all or some of
their capital.
ıı
A ny return in a winding up may be adversely affected if the CPS have been
Converted or Written Off as a result of a Capital Trigger Event or Non-Viability
Trigger Event.
ıı
A fter Conversion, CPS Holders become holders of Ordinary Shares and will
rank equally with all other Ordinary Shareholders in a winding up.
ıı
A fter a Write Off, the rights of a CPS to any return of capital in a winding up are
broadly equivalent to the rights of the Ordinary Shares the CPS Holder would
have held if Conversion of the CPS had occurred.
ıı
B OQ has applied to ASX for CPS to be quoted on ASX and if quoted, CPS
are expected to trade under ASX code “BOQPD”. Quotation of CPS is not
guaranteed. If ASX does not grant permission for CPS to be quoted, then CPS
will not be issued and all Application Payments will be refunded (without
interest) to Applicants as soon as practicable.
Section 2.10
Section 6.6.2
ıı
BOQ has not sought a credit rating for CPS.
2.1.10 Will CPS be
guaranteed?
ıı
PS do not represent a deposit liability of BOQ and are not protected accounts
C
for the purposes of the depositor protection provisions of Australian banking
legislation.
ıı
PS are not guaranteed or insured by any government, government agency or
C
compensation scheme of Australia or any other jurisdiction, or by any other
person.
2.1.11 Are CPS secured?
ıı
CPS are not secured in any way against any asset of BOQ.
Clause 1 of the CPS Terms
2.1.12 Are there default
events for CPS?
ıı
B OQ will only be in default under the CPS Terms in the event of a winding up
of BOQ. Such winding up will not affect the ranking of the CPS but may affect
the amounts recieved under the CPS.
Clause 8 of the CPS Terms
ıı
B OQ is not subject to any cross default, negative pledge, restrictive covenant or
similar obligation in any other instrument which may trigger early repayment of
capital in respect of CPS.
ıı
o. CPS Holders are not entitled to set-off any amounts due to a CPS Holder in
N
respect of CPS against any amount of any nature owed by a CPS Holder
to BOQ.
ıı
BOQ is not entitled to set-off any amount of any nature due to BOQ by a CPS
Holder against any amount owed by BOQ to the CPS Holder in respect of CPS.
For personal use only
2.1.9 Will CPS be rated?
2.1.13 Do CPS Holders or
BOQ have any setoff rights?
Clauses 1 and 9 of the
CPS Terms
Clause 10 of the CPS Terms
BOQ CPS PROSPECTUS 2012
24
2. ABOUT CPS
For personal use only
2.2 Regulatory Treatment of CPS
TOPIC
SUMMARY
2.2.1 Who is APRA?
ıı
A PRA is the prudential regulator of the Australian financial services industry.
APRA oversees banks, credit unions, building societies, general insurance and
reinsurance companies, life insurance companies, friendly societies, and most
members of the superannuation industry.
ıı
A PRA’s mission is to establish and enforce Prudential Standards and practices
designed to ensure that, under all reasonable circumstances, financial
promises made by institutions APRA supervises are met within a stable,
efficient and competitive financial system.
ıı
A PRA’s website at www.apra.gov.au includes further details of its functions and
Prudential Standards.
ıı
A ny business requires capital to support its income generating activities in its
chosen industry.
ıı
A PRA’s regulatory capital Prudential Standards aim to ensure that authorised
deposit-taking institutions (ADI), such as BOQ, maintain adequate
capital to support the risks associated with their activities and to protect
depositors. APRA has detailed guidelines and restrictions on the types of
capital instruments that are permitted to form the capital base. The types of
capital deemed eligible for inclusion in the capital base are referred to as
regulatory capital.
ıı
A PRA classifies ADIs’ regulatory capital into two tiers for its supervisory
purposes – referred to as Tier 1 Capital and Tier 2 Capital. Tier 1 Capital is
generally considered a higher quality capital than Tier 2 Capital, generally due
to features such as longevity and loss absorption.
ıı
n 28 September 2012, APRA released the Basel III Prudential Standards that
O
will govern the implementation of the Basel III capital framework in Australia
and are expected to come into force from 1 January 2013.
ıı
Under these requirements, Tier 1 Capital is comprised of:
2.2.2 What is regulatory
capital?
2.2.3 What is Tier 1
Capital?
25
BOQ CPS PROSPECTUS 2012
––
Common Equity Tier 1 Capital; and
––
Additional Tier 1 Capital.
ıı
T hese categories will replace the categories of Tier 1 Capital permitted under
existing capital standards of Fundamental Tier 1 and Residual Tier 1 Capital.
ıı
ommon Equity Tier 1 Capital is recognised as the highest quality component
C
of capital for BOQ. Common Equity Tier 1 Capital for ADIs (and their nonoperating holding companies) will comprise paid-up ordinary shares, retained
earnings, other disclosed reserves permitted for inclusion by APRA and certain
other items permitted by APRA less regulatory adjustments applied in the
calculation of Common Equity Tier 1 Capital.
ıı
T he non-common equity components of Tier 1 Capital which do not satisfy all
of the criteria for inclusion in Common Equity Tier 1 Capital are referred to as
Additional Tier 1 Capital. These instruments must be able to absorb losses on
a going-concern basis, and can include both equity instruments and capital
instruments classified as liabilities for accounting purposes.
FURTHER
INFORMATION
For personal use only
2.2.4 What is the
regulatory treatment
of CPS?
ıı
A PRA has confirmed to BOQ that CPS qualify as being eligible for inclusion in
Non-Innovative Residual Tier 1 Capital under its current Prudential Standards.
ıı
A PRA has also confirmed to BOQ that CPS will qualify as being eligible for
inclusion in Additional Tier 1 Capital from 1 January 2013, which is the date
when APRA’s Basel III Prudential Standards are expected to become effective.
ıı
T he CPS and BOQ’s other regulatory capital help to protect BOQ’s depositors
and other creditors by providing a loss absorbing capital buffer which support
losses that may be incurred on BOQ’s assets.
2.3Dividends
TOPIC
SUMMARY
FURTHER
INFORMATION
2.3.1 What are Dividends?
ıı
Clause 6 of the CPS Terms
Dividends on CPS are:
––
preferred;
––
discretionary;
––
non-cumulative;
––
based on a floating rate;
––
scheduled to be paid semi-annually in arrears on the Dividend Payment
Dates;
––
subject to certain Dividend Payment Tests; and
––
expected to be fully franked.
ıı
T he value and availability of franking credits to a CPS Holder will differ
depending on the CPS Holder’s personal tax circumstances. Each CPS Holder
will only receive the benefit of the franking credits where those credits are able
to be claimed in the CPS Holder’s tax return.
ıı
If any Dividend is not fully franked, then CPS Holders will be entitled to
an additional cash payment to compensate for the unfranked amount. This
payment will also be subject to the Dividend Payment Tests.
ıı
ividends are non-cumulative. If a Dividend or part of a Dividend is not paid
D
on a Dividend Payment Date, CPS Holders have no claim or entitlement in
respect of non-payment and no right to receive that Dividend at any later time.
ıı
A failure to pay a scheduled Dividend will not constitute an event of default and
a CPS Holder has no right to apply for BOQ to be wound up and will have no
right of set-off or offsetting rights or claim on BOQ.
BOQ CPS PROSPECTUS 2012
26
2. ABOUT CPS
For personal use only
2.3.2 How will the Dividend
Rate be calculated?
27
BOQ CPS PROSPECTUS 2012
ıı
The Dividend Rate for each semi-annual Dividend is a floating rate of:
(BBR + Margin) x (1 – t)
where:
––
BBR is the 180 day Bank Bill Swap Rate (BBSW) expressed as a
percentage per annum on the first Business Day of the relevant Dividend
Period;
––
Margin is 5.10% per annum as determined under the Bookbuild; and
––
t is the Australian corporate tax rate applicable to the franking account of
BOQ at the relevant Dividend Payment Date.
As an example, assuming a BBR of 3.25% per annum and the Margin is 5.10%
per annum and t is 30%, then the Dividend Rate for that Dividend Period would
be calculated as follows:
BBR
3.25% per annum
plus Margin
5.10% per annum
________________________________________________
Equivalent unfranked Dividend Rate
8.35% per annum
Multiplied by (1 – t)
x 0.70
________________________________________________
Indicative fully franked Dividend Rate
5.8450% per annum
Clause 6 of the CPS Terms
ıı
T he BBR is the 180 day Bank Bill Swap Rate (BBSW) which is a reference rate
displayed on the Reuter’s page BBSW (or any page which replaces that page)
on the first Business Day of the relevant Dividend Period.
ıı
T he 180 day BBSW rate represents the average interest rate at which
institutions on the Australian Financial Markets Association’s BBSW panel
will trade 180 day Australian dollar bills of exchange accepted by an approved
bank.
ıı
T he BBSW rate is one of the interest rate benchmarks published daily by
the Australian Financial Markets Association and appearing on information
services (e.g. Reuters page BBSW). BBSW rates provide references for the
pricing, rate-setting and valuation of Australian dollar financial securities.
ıı
T he graph below illustrates the movement in BBSW over the last 10 years. The
rate on 14 November 2012 was 3.25% per annum.
Clause 6.2 of the CPS Terms
9
8
7
180 day BBSW (% p.a.)
For personal use only
2.3.3 What is the BBR?
6
5
4
3
2
1
0
Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Source: Reuters as at 14 November 2012
ıı
T he above graph is for illustrative purposes only and does not indicate,
guarantee or forecast the actual BBSW. The actual BBSW for the Dividend
Periods may be higher or lower than the rates in the above graph.
BOQ CPS PROSPECTUS 2012
28
2. ABOUT CPS
For personal use only
2.3.4 How will the Dividend
be calculated for
each Dividend
Period?
2.3.5 What is the impact of
franking credits?
2.3.6 When are the
Dividend Payment
Dates?
5
29
ıı
ividends scheduled to be paid on each Dividend Payment Date will be
D
calculated using the following formula:
Dividend Rate x Face Value x D
365
where:
––
Dividend Rate means the rate (expressed as a percentage per annum)
calculated as set out in Section 2.3.2;
––
Face Value means $100 per CPS; and
––
D means the number of days in the Dividend Period calculated as set out
in the CPS Terms.
As an example, following the formula above, if the Dividend Rate was 5.8450%
per annum, then the Dividend on each CPS for that Dividend Period (if the
Dividend Period was 182 days) would be calculated as follows:
Indicative fully franked Dividend Rate
5.8450% per annum
Multiplied by the Face Value
Multiplied by the number of days in the Dividend Period
Divided by 365
Illustrative fully franked Dividend payment
per CPS for a Dividend Period of 182 days
ıı
x $100.00
5
x 182
÷ 365
$2.9145
The above example is for illustrative purposes only and does not indicate,
guarantee or forecast the actual Dividend payment for any Dividend Period.
Actual Dividend payments may be higher or lower than this example.
ıı
ividends are expected, but not guaranteed, to be fully franked. The franking
D
credits represent a CPS Holder’s share of tax paid by BOQ on the profits from
which the cash Dividend is paid.
ıı
PS Holders should be aware that the potential value of any franking credits
C
does not accrue at the same time as the receipt of any cash Dividend. CPS
Holders should also be aware that the ability to use the franking credits, either
as an offset to a tax liability or by claiming a refund after the end of the income
year, will depend on the individual tax position of each CPS Holder.
ıı
PS Holders should refer to the Australian taxation summary in Section 7 and
C
seek professional advice in relation to their tax position.
ıı
ividends will be calculated semi-annually and are scheduled to be paid semiD
annually in arrears, subject to the Dividend Payment Tests.
ıı
Dividend Payment Dates are 15 April and 15 October each year.
ıı
The first Dividend Payment Date is 15 April 2013.
ıı
If CPS are Converted, Redeemed or Transferred, the date on which that
occurs will be a Dividend Payment Date for those CPS. For a Conversion or
Redemption that will be the final Dividend Payment Date.
ıı
If any of these dates is not a Business Day, then the Dividend Payment Date will
be the next Business Day.
Dividend Periods will generally contain 181 to 184 days with the exception of the first Dividend Period which is expected to contain 112 days.
BOQ CPS PROSPECTUS 2012
Clause 6.1 of the CPS Terms
Section 7
Clauses 6.4 and 20.2(k) of
the CPS Terms
ıı
A Dividend is only payable to those persons registered as CPS Holders on
the date which is 11 Business Days before the Dividend Payment Date for that
Dividend.
Clause 6.7 of the CPS Terms
2.3.8 What are the
Dividend Payment
Tests?
ıı
ividends may not always be paid. The payment of each Dividend is subject to
D
the following Dividend Payment Tests being satisfied:
Clause 6.6 of the CPS Terms
For personal use only
2.3.7 What is the CPS
Dividend Record
Date?
2.3.9 What is the
Distribution
Restriction and when
will it apply?
––
the Directors of BOQ, in their absolute discretion, determining that the
Dividend is payable;
––
BOQ being lawfully able to pay the Dividend under the Corporations Act;
––
the payment of the Dividend not resulting in any breach of APRA’s then
prevailing capital adequacy standards as they are applied to BOQ at that
time (unless APRA otherwise approves in writing); and
––
APRA not otherwise objecting to the payment of the Dividend.
ıı
T he Directors will not determine a Dividend to be payable if, in their opinion,
the payment would result in BOQ becoming, or being likely to become,
insolvent for the purposes of the Corporations Act.
ıı
If for any reason a Dividend has not been paid on a Dividend Payment Date
(Relevant Dividend Payment Date), subject to certain exceptions BOQ
must not, until and including the next Dividend Payment Date:
––
declare, determine or pay a dividend or make any distribution on Ordinary
Shares; or
––
buy-back or reduce capital on Ordinary Shares,
Clauses 6.10 and 6.11 of
the CPS Terms
unless:
––
the Dividend is paid in full within three Business Days of the Relevant
Dividend Payment Date;
––
all CPS have been Converted or Redeemed; or
––
a Special Resolution of the CPS Holders has been passed approving such
action.
2.4 Conversion, Redemption or Transfer
TOPIC
SUMMARY
2.4.1 What is Conversion?
ıı
onversion means the conversion of CPS into a number of Ordinary Shares in
C
accordance with the formula described in Section 2.4.4.
ıı
E xcept for Conversion on a Capital Trigger Event or Non-Viability Trigger Event,
Conversion may only occur if the Conversion Conditions are satisfied – see
Section 2.4.3.
ıı
A PRA’s eligibility requirements for Additional Tier 1 Capital instruments and
certain ratings agency considerations require that the number of Ordinary
Shares per CPS that CPS Holders are issued on Conversion may not be greater
than the Maximum Conversion Number – see Section 2.4.5 - and that the
Ordinary Shares received are listed on ASX.
2.4.2 Why do CPS
have Conversion
Conditions?
FURTHER
INFORMATION
Sections 2.4.3 and 2.4.4 and
Clause 15 of the CPS Terms
Clause 13 of the CPS Terms
BOQ CPS PROSPECTUS 2012
30
2. ABOUT CPS
For personal use only
2.4.3 What are the
Conversion
Conditions?
31
BOQ CPS PROSPECTUS 2012
ıı
T he Conversion Conditions in relation to any possible Conversion Date (except
for a Capital Trigger Event or Non-Viability Trigger Event), are as follows:
First Conversion Condition –– the Test Conversion Number on the 25th Business Day before the Relevant
Date is no greater than 90% of the Maximum Conversion Number.
For example, for a Mandatory Conversion with a Relevant Fraction of 0.5,
this is equivalent to the VWAP of Ordinary Shares on the 25th Business
Day before the relevant Mandatory Conversion Date being equal to or
greater than
56.12% of the Pre-Issue VWAP;
Second Conversion Condition –– the Conversion Number on the Relevant Date is no greater than the
Maximum Conversion Number.
For example, for a Mandatory Conversion with a Relevant Fraction of 0.5,
this is equivalent to the VWAP of Ordinary Shares during the period of 20
Business Days on which trading in Ordinary Shares takes place before
(but not including) the relevant Mandatory Conversion Date being equal
to or greater than 50.51% of the Pre-Issue VWAP; and
Third Conversion Condition –– no Delisting Event applies in respect of the Relevant Date, that is, Ordinary
Shares remain listed on ASX and trading has not been suspended for five
or more consecutive Business Days before, and the suspension is not
continuing on, the Mandatory Conversion Date.
ıı
In general terms, VWAP refers to the average of the daily volume weighted
average sale prices of Ordinary Shares sold on ASX during the relevant period.
You should refer to clause 15 of the CPS Terms and the definition of VWAP in
clause 20.1 of the CPS Terms for a more detailed explanation of how the VWAP
is calculated for the purposes of the CPS.
ıı
The Pre-Issue VWAP is the VWAP of Ordinary Shares during the 20 Business
Days on which trading in Ordinary Shares took place immediately preceding (but
not including) the Issue Date (as adjusted in accordance with the CPS Terms).
ıı
hen applicable, the satisfaction of the Conversion Conditions on a possible
W
Conversion Date will depend on the price of Ordinary Shares. For example, if the
Pre-Issue VWAP is $7.50, then, for the Conversion Conditions to be satisfied
where the Relevant Fraction is 0.5:
––
the VWAP for the First Conversion Condition would need to be at least
$4.21 (greater than 56.12% of the Pre-Issue VWAP); and
––
the VWAP for the Second Conversion Condition would need to be at least
$3.79 (greater than 50.51% of the Pre-Issue VWAP).
ıı
This example is for illustrative purposes only and does not indicate whether or
not the Conversion Conditions will actually be satisfied in respect of a possible
Conversion Date.
ıı
See Section 2.4.4 regarding the Conversion Number and Section 2.4.5 regarding
the Maximum Conversion Number.
ıı
Other than where a Capital Trigger Event or Non-Viability Trigger Event has
occurred, Conversion cannot occur unless all three Conversion Conditions are
satisfied. If the Conversion Conditions are not satisfied, CPS Holders will hold
their CPS until Conversion subsequently occurs (if at all) or until the CPS are
Redeemed or Transferred – see Sections 2.4.6 to 2.4.9.
ıı
Where a Capital Trigger Event or Non-Viability Trigger Event has occurred,
Conversion will not be subject to the Conversion Conditions - see Section 2.6
regarding a Capital Trigger Event and Section 2.7 regarding a Non-Viability
Trigger Event.
Clauses 13.2, 13.3, 13.5, 13.6,
13.7 and 15 of the CPS Terms
For personal use only
2.4.4 How many Ordinary
Shares will I receive
if CPS are Converted?
ıı
On Conversion, CPS Holders will receive for each CPS a Conversion Number
of Ordinary Shares.
ıı
The Conversion Number is calculated using the following formula:
Clause 15 of the CPS Terms
Face Value
Pre-Conversion VWAP x (1-Discount Factor)
Where:
––
Face Value means $100 per CPS;
––
Discount Factor which is 1% or 0.01, expressed as a decimal;
––
Pre-Conversion VWAP means the VWAP of Ordinary Shares traded on
ASX for the 20 Business Days on which trading in Ordinary Shares took
place immediately preceding (but not including) the relevant Conversion
Date. On Conversion for an Acquisition Event or Potential Acquisition
Event, the VWAP period is shortened if there is less than 20 Business
Days on which trading took place between the Acquisition Event or
Potential Acquisition Event and the Conversion Date. On Conversion for
a Capital Trigger Event or Non-Viability Trigger Event, the VWAP period is
the immediately preceding 5 Business Days on which trading in Ordinary
Shares took place on ASX.
ıı
T he Conversion Conditions generally prevent Conversion from occurring if the
number of Ordinary Shares that CPS Holders would receive on Conversion would
exceed the Maximum Conversion Number. However, following a Capital Trigger
Event or Non-Viability Trigger Event, the Conversion Conditions will not apply
and the number of Ordinary Shares that CPS Holders will receive for each CPS
will be limited to the Maximum Conversion Number (see Section 2.4.5).
ıı
here the total number of Ordinary Shares to be issued to a CPS Holder in
W
respect of all of that CPS Holder’s CPS being Converted includes a fraction,
that fraction will be disregarded.
BOQ CPS PROSPECTUS 2012
32
2. ABOUT CPS
For personal use only
2.4.5 What is the Maximum
Conversion Number?
2.4.6 When can Mandatory
Conversion occur?
2.4.7 When can Early
Conversion,
Redemption or
Transfer occur?
ıı
BOQ CPS PROSPECTUS 2012
Clauses 13.3 and 15 of the
CPS Terms
Face Value
Relevant Fraction x Pre-Issue VWAP
where:
––
Face Value means $100 per CPS;
––
Relevant Fraction is:
––
•
0.5 if Conversion is occurring on a Mandatory Conversion Date or
before 1 January 2013; or
•
if Conversion is occurring at any other time, 0.2;
Pre-Issue VWAP is the VWAP of Ordinary Shares for the 20 Business
Days on which trading in Ordinary Shares took place immediately
preceding, but not including, the Issue Date (as adjusted in accordance
with the CPS Terms).
ıı
F or example, if the Pre-Issue VWAP is $7.50 and the Relevant Fraction is 0.5,
then the Maximum Conversion Number would be 26.6667 Ordinary Shares per
CPS.
ıı
T he Maximum Conversion Number is set to reflect a VWAP of 50% or 20%, as
the case requires, of the Pre-Issue VWAP.
ıı
T he Maximum Conversion Number will be adjusted if BOQ makes a bonus
issue or where Ordinary Shares are reconstructed, consolidated, divided or
reclassified into a lesser or greater number of securities (not involving any
cash payment or other distribution to or by Ordinary Shareholders) as set out
in clauses 15.5 to 15.7 of the CPS Terms.
ıı
PS will Mandatorily Convert to Ordinary Shares on the earlier of the
C
occurrence of:
ıı
ıı
33
T he Maximum Conversion Number is calculated (to four decimal places) using
the following formula:
––
a Mandatory Conversion Date – see Section 2.5;
––
a Capital Trigger Event – see Section 2.6;
––
a Non-Viability Trigger Event – see Section 2.7; or
––
an Acquisition Event – see Section 2.8.
B OQ may elect (subject to APRA’s prior written approval) to serve an Early
Conversion/Redemption Notice in respect of:
––
Conversion, Redemption or Transfer of some or all of the CPS on the
Optional Conversion/Redemption Date;
––
the Conversion of all (but not some only) of the CPS following the
occurrence of a Potential Acquisition Event; or
––
Conversion, Redemption or Transfer of some or all of the CPS, following
the occurrence of a Regulatory Event or Tax Event.
CPS Holders should not expect that APRA’s prior written approval for any such
Conversion, Redemption or Transfer will be given.
Clauses 13.5 and 13.7 of the
CPS Terms
Clauses 13.6 and 13.7 of the
CPS Terms
For personal use only
2.4.8 What is Redemption?
2.4.9 What is Transfer?
ıı
Redemption of CPS can occur by way of:
––
redemption; or
––
buy-back (other than an on-market buy-back); or
––
cancellation pursuant to a reduction of capital; or
––
any combination of these.
ıı
If CPS are Redeemed, BOQ will pay CPS Holders the Face Value for each CPS
Redeemed plus a Dividend for the Dividend Period ending on the Redemption
Date, if BOQ determines to pay such a Dividend (Redemption Price).
ıı
If Redemption is to occur by way of buy-back, under the CPS Terms each
CPS Holder agrees to accept the buy-back offer on the terms of the Buy-Back
Agreement – see clause 14.4 of the CPS Terms.
ıı
If Redemption is to occur by way of capital reduction, each CPS Holder agrees
to vote their CPS in favour of the resolution to approve the capital reduction at
the relevant time – see clause 14.6 of the CPS Terms.
ıı
The choice of Redemption is subject to the condition that APRA is satisfied
that either the CPS the subject of Redemption are replaced concurrently or
beforehand with Tier 1 Capital of the same or better quality and the replacement
of CPS is done under conditions that are sustainable for BOQ’s income
capacity, or that the BOQ Group’s capital position is well above its minimum
capital requirements after BOQ elects to Redeem the CPS.
ıı
Redemption is subject to APRA’s prior written approval.
ıı
If BOQ elects to have the CPS Transferred, BOQ will appoint one or more third
parties (Nominated Transferee) to purchase from CPS Holders their CPS
for the Face Value. On Transfer, CPS Holders will receive $100 for each CPS
from the Nominated Transferee. The date on which Transfer occurs will also be
a Dividend Payment Date for those CPS.
ıı
If BOQ appoints more than one Nominated Transferee, all or any of the CPS
held by a CPS Holder which are being Transferred may be purchased by any
one or any combination of the Nominated Transferees, as determined by BOQ.
ıı
If the Nominated Transferee does not pay the Face Value to CPS Holders on
the Relevant Date, or otherwise fails (or is not required to fulfil) its obligations
under the Transfer Notice, the Transfer will not proceed and CPS Holders will
continue to hold their CPS.
ıı
The Nominated Transferee must have a long term counterparty credit rating
from one of Standard & Poor’s, Moody’s or Fitch of not less than investment
grade. The Nominated Transferee may not be BOQ or a related entity of BOQ.
Clause 14 of the CPS Terms
Clause 16 of the CPS Terms
BOQ CPS PROSPECTUS 2012
34
2. ABOUT CPS
2.5 Mandatory Conversion on a Mandatory Conversion Date
SUMMARY
FURTHER
INFORMATION
2.5.1 What is Mandatory
Conversion?
ıı
CPS Holders will receive Ordinary Shares on Conversion of the CPS on the
earliest Mandatory Conversion Date on which the Conversion Conditions are
satisfied unless, in accordance with the CPS Terms, the CPS have otherwise
been Converted or Redeemed.
Clauses 13.5 and 15 of the
CPS Terms
ıı
Upon Conversion on a Mandatory Conversion Date, CPS Holders will receive
$101.01 worth of Ordinary Shares per CPS based on the VWAP during the
20 Business Days on which trading in Ordinary Shares took place before that
Mandatory Conversion Date.
ıı
The Mandatory Conversion Date will be the Scheduled Mandatory Conversion
Date of 15 April 2020 provided that the Conversion Conditions are satisfied on
that date.
ıı
If any of the Conversion Conditions are not satisfied on the Scheduled
Mandatory Conversion Date, then the Mandatory Conversion Date will be
deferred until the next Dividend Payment Date in respect of which all of the
Conversion Conditions are satisfied.
ıı
The First and Second Conversion Conditions are intended to protect CPS
Holders against receiving on Conversion of CPS a number of Ordinary Shares
that would be worth less than $101.01 per CPS (although, because Ordinary
Share prices fluctuate on ASX, by the time any Conversion actually occurs the
value of Ordinary Shares received may be more or less than $101.01).
ıı
The Third Conversion Condition is intended to provide protection for CPS
Holders by making Conversion conditional on CPS Holders receiving Ordinary
Shares which are capable of being sold on ASX.
For personal use only
TOPIC
2.5.2 When is the
Mandatory
Conversion Date?
2.5.3 Effect of Conversion
Conditions
Clause 13.5 of the CPS Terms
Clause 13.2 of the CPS Terms
2.6 Mandatory Conversion on Capital Trigger Event
TOPIC
SUMMARY
FURTHER
INFORMATION
2.6.1 What is a Capital
Trigger Event?
ıı
For CPS to be characterised as Additional Tier 1 Capital under APRA’s Basel III
Prudential Standards, it is an APRA regulatory requirement that a Conversion is
triggered if BOQ’s ratio of Common Equity Tier 1 Capital to total risk weighted
assets falls to, or below, 5.125%, calculated on a Level 1 or Level 2 basis.
Clause 13.5 of the CPS Terms
ıı
This is called a Capital Trigger Event.
ıı
If a Capital Trigger Event occurs, the number of CPS required to Convert on
a pro rata basis with other Relevant Tier 1 Capital Instruments to cease the
Capital Trigger Event will immediately Convert into Ordinary Shares.
ıı
Such Conversion is not subject to the Conversion Conditions being satisfied.
The number of Ordinary Shares received per CPS will be a number based on
a VWAP during the 5 Business Days on which trading in Ordinary Shares took
place before the Capital Trigger Event, but capped at the Maximum Conversion
Number. As a result in these circumstances CPS Holders may receive only
the Maximum Conversion Number of Ordinary Shares per CPS which may be
worth significantly less than $101.01 and suffer a loss as a consequence.
ıı
The Maximum Conversion Number for the Capital Trigger Event is the Face
Value ($100) divided by 20% of the Pre-Issue VWAP of Ordinary Shares (as
such number may be adjusted in limited circumstances). See Sections 2.4.4
and 2.4.5.
2.6.2 What happens after
a Capital Trigger
Event?
35
BOQ CPS PROSPECTUS 2012
Clauses 13.3, 13.5, 13.8, 15
and 20.1 of the CPS Terms
For personal use only
2.6.3 What is the Common
Equity Tier 1 Capital
Ratio?
2.6.4 When does
Conversion on
account of a Capital
Trigger Event
mandatorily occur?
2.6.5 Is Conversion on
account of a Capital
Trigger Event subject
to the Conversion
Conditions?
6
ıı
The Common Equity Tier 1 Capital Ratio is the ratio of Common Equity Tier 1
Capital, to the total risk weighted assets of BOQ, as prescribed by APRA under
its Basel III Prudential Standards. The adoption of the Basel III definition of
Common Equity Tier 1 Capital replaces Fundamental Tier 1 Capital.
ıı
At 31 August 2012, BOQ’s Fundamental Tier 1 Capital to total risk-weighted
assets was 8.5% under the current APRA Prudential Standards. BOQ estimates
that, as at 31 August 2012, its Common Equity Tier 1 Capital Ratio would be
8.6% based on APRA’s Basel III Prudential Standards6, which equates to a
surplus of capital of approximately A$736.5 million above the Capital Trigger
Event level of 5.125%.
ıı
BOQ’s estimated Common Equity Tier 1 Capital Ratio of 8.6% is well above the
Capital Trigger Event level of Common Equity Tier 1 Capital Ratio of 5.125%,
on a Level 1 and Level 2 basis. Based on APRA’s Basel III Prudential Standards,
BOQ is well in excess of the minimum Common Equity Tier 1 requirement of
4.5% and the Common Equity Tier 1 plus capital conservation buffer minimum
of 7.0%, which is expected to formally take effect in 2016. BOQ gives no
assurance as to what its Common Equity Tier 1 Capital Ratio will be at any time
as it may be significantly impacted by unexpected events affecting its business,
operations and financial condition.
ıı
Conversion of CPS following the occurrence of a Capital Trigger Event must
occur immediately following that event occurring.
ıı
Conversion may occur automatically without the need for any further act or step
by BOQ. In that case, BOQ will recognise CPS Holders as having been issued
the Conversion Number of Ordinary Shares. BOQ expects any ASX trades
in CPS that have not settled on the date a Capital Trigger Event occurs will
continue to settle in accordance with the normal ASX T+3 settlement, although
BOQ expects the seller will be treated as having delivered, and the buyer will
be treated as having acquired, the Conversion Number of Ordinary Shares into
which CPS have been Converted as a result of the occurrence of the Capital
Trigger Event.
ıı
BOQ must make an ASX announcement immediately after becoming aware that
a Capital Trigger Event has occurred.
ıı
No. Conversion following a Capital Trigger Event is not subject to the
Conversion Conditions being satisfied.
Clauses 13.5, 13.8 and 15.9 of
the CPS Terms
Clauses 13.5, 13.8 and 15.9 of
the CPS Terms
Clauses 13.5, 13.8 and 15.9 of
the CPS Terms
BOQ only discloses Common Equity Tier 1 Capital at Level 2. The difference between the calculation at Level 1 and Level 2 is not material.
BOQ CPS PROSPECTUS 2012
36
2. ABOUT CPS
For personal use only
2.6.6 How many Ordinary
Shares will CPS
Holders receive on
the Capital Trigger
Conversion Date?
37
BOQ CPS PROSPECTUS 2012
ıı
The number of Ordinary Shares a CPS Holder will receive is determined as
described in Section 2.4.4 and cannot be more than the Maximum Conversion
Number.
ıı
Since Conversion on account of a Capital Trigger Event is not subject to the
Conversion Conditions, the number of Ordinary Shares a CPS Holder may
receive in this circumstance may be worth significantly less than $101.01 and a
CPS Holder may suffer a loss as a consequence.
ıı
If on the occurrence of a Capital Trigger Event, Conversion of only some CPS
on a pro rata basis with other Relevant Tier 1 Capital Instruments is required
for BOQ to cease to be subject to a Capital Trigger Event, BOQ must endeavour
to treat CPS Holders on an approximately proportionate basis, but may
discriminate to take account of the effect on marketable parcels of CPS and
other logistical considerations.
ıı
If on a Capital Trigger Conversion Date, BOQ is prevented by applicable law
or order of any court or action of any regulatory authority or any other reason
from Converting CPS which would otherwise be Converted (Inability Event),
and Conversion has not been effected within 5 days after the Capital Trigger
Event Conversion Date, to the extent that the Inability Event prevents BOQ from
Converting CPS, the rights attached to those CPS in respect of dividends and
return of capital become:
––
if a winding up occurs in respect of BOQ, instead of a claim for payment
out of the surplus available to shareholders in a winding up of $100 (plus
the amount of any Dividend resolved to be paid but unpaid), the CPS
Holder’s claim in respect of a CPS is for the sum which would have been
paid in respect of the CPS out of the surplus available to shareholders
in the winding up if the CPS were the Conversion Number of Ordinary
Shares; and
––
instead of the Dividends as described in Section 2.3, if a dividend is paid
on Ordinary Shares, a non-cumulative dividend is payable in respect
of the CPS in an amount determined as if the CPS were a number of
Ordinary Shares equal to the Conversion Number,
in each case with that Conversion Number being finally determined as if the
CPS had Converted on occurrence of the Capital Trigger Event (and in any case
not exceeding the Maximum Conversion Number). These changes are referred
to as CPS being “Written Off”.
Clauses 13.5, 13.8 and 15 of
the CPS Terms
2.7 Mandatory Conversion on Non-Viability Trigger Event
SUMMARY
FURTHER
INFORMATION
2.7.1 What is a NonViability Trigger
Event?
ıı
Clause 13.5 of the CPS Terms
For personal use only
TOPIC
2.7.2 What happens after a
Non-Viability Trigger
Event?
2.7.3 What does non-viable
mean?
For CPS to be characterised as Additional Tier 1 Capital under APRA’s Basel III
Prudential Standards, it is an APRA regulatory requirement that a Conversion
is triggered if APRA provides a written determination to BOQ that all (or some)
CPS and other Relevant Tier 1 Capital Instruments (i.e. other Tier 1 Capital
instruments which can be converted or written off in a similar way to CPS) as
specified in the determination must be converted or written off:
––
as without conversion or write off, BOQ would become, in APRA’s
opinion, non-viable; or
––
as without a public sector injection of capital (or equivalent capital
support), BOQ would become, in APRA’s opinion, non-viable.
ıı
This is called a Non-Viability Trigger Event.
ıı
If a Non-Viability Trigger Event occurs, the number of CPS required to Convert
on a pro rata basis with other Relevant Tier 1 Capital Instruments to cease the
Non-Viability Trigger Event will immediately Convert into Ordinary Shares.
ıı
Such Conversion is not subject to the Conversion Conditions being satisfied.
The number of Ordinary Shares received per CPS will be a number based
on a VWAP during the 5 Business Days on which trading in Ordinary Shares
took place before the Non-Viability Trigger Event, but capped at the Maximum
Conversion Number. As a result in these circumstances CPS Holders may
receive only the Maximum Conversion Number of Ordinary Shares per CPS
which may be worth significantly less than $101.01 and suffer a loss as a
consequence.
ıı
The Maximum Conversion Number for the Non-Viability Trigger Event is the
Face Value ($100) divided by 20% of the Pre-Issue VWAP of Ordinary Shares
(as such number may be adjusted in limited circumstances). See Sections
2.4.4 and 2.4.5.
ıı
APRA has not provided guidance as to how it would determine non-viability.
ıı
Non-viability would be expected to include serious impairment of BOQ’s
financial position and insolvency. However it is possible that APRA’s definition
of non-viable may not necessarily be constrained to solvency measures or
capital ratios.
ıı
APRA may publish further guidance on the parameters used to determine nonviability, however it is possible that it will not provide any further guidance and
BOQ has no control over whether it will do so.
Clauses 13.3, 13.5, 13.8, 15.9
and 20.1 of the CPS Terms
Clause 13.5 of the CPS Terms
BOQ CPS PROSPECTUS 2012
38
2. ABOUT CPS
2.7.4 When does
Conversion on
account of a NonViability Trigger Event
mandatorily occur?
Conversion of CPS following the occurrence of a Non-Viability Trigger Event,
must occur immediately following that event occurring.
ıı
Conversion may occur automatically without the need for any further act or step
by BOQ. In that case, BOQ will recognise CPS Holders as having been issued
the Conversion Number of Ordinary Shares. BOQ expects any ASX trades in
CPS that have not settled on the date a Non-Viability Trigger Event occurs will
continue to settle in accordance with the normal ASX T+3 settlement, although
BOQ expects the seller will be treated as having delivered, and the buyer will
be treated as having acquired, the Conversion Number of Ordinary Shares
into which CPS have been Converted as a result of the occurrence of the NonViability Trigger Event.
ıı
BOQ must make an ASX announcement immediately after becoming aware that
a Non-Viability Trigger Event has occurred.
2.7.5 Is Conversion on
account of a NonViability Trigger
Event subject to
the Conversion
Conditions?
ıı
No. Conversion following a Non-Viability Trigger Event is not subject to the
Conversion Conditions being satisfied.
Clause 13.5 of the CPS Terms
2.7.6 How many Ordinary
Shares will CPS
Holders receive on
the Non-Viability
Conversion Date?
ıı
The number of Ordinary Shares a CPS Holder will receive is determined as
described in Section 2.4.4 and cannot be more than the Maximum Conversion
Number.
Clauses 13.5, 13.8 and 15 of
the CPS Terms
ıı
Since Conversion on account of a Non-Viability Trigger Event is not subject
to the Conversion Conditions, the number of Ordinary Shares a CPS Holder
may receive per CPS in this circumstance may be worth significantly less than
$101.01 and a CPS Holder may suffer a loss as a consequence.
ıı
If on the occurrence of a Non-Viability Trigger Event Conversion of only some
CPS on a pro rata basis with other Relevant Tier 1 Capital Instruments is
required for BOQ to cease to be subject to a Non-Viability Trigger Event, BOQ
must endeavour to treat CPS Holders on an approximately proportionate basis,
but may discriminate to take account of the effect on marketable parcels of CPS
and other logistical considerations.
ıı
If on a Non-Viability Conversion Date, there is an Inability Event and
Conversion has not been effected within 5 days after the Non-Viability
Conversion Date, to the extent that the Inability Event prevents BOQ from
Converting CPS, the CPS will be Written Off, that is the rights attached to those
CPS in respect of dividends and return of capital become:
For personal use only
ıı
––
if a winding up occurs in respect of BOQ, instead of a claim for payment out
of the surplus available to shareholders in a winding up of $100 (plus the
amount of any Dividend resolved to be paid but unpaid), the CPS Holder’s
claim in respect of a CPS is for the sum which would have been paid
in respect of the CPS out of the surplus available to shareholders in the
winding up if the CPS were the Conversion Number of Ordinary Shares; and
––
instead of the Dividends as described in Section 2.3, if a dividend is paid
on Ordinary Shares, a non-cumulative dividend is payable in respect
of the CPS in an amount determined as if the CPS were a number of
Ordinary Shares equal to the Conversion Number,
in each case with that Conversion Number being finally determined as if the
CPS had Converted on the Non-Viability Conversion Date (and in any case not
exceeding the Maximum Conversion Number).
39
BOQ CPS PROSPECTUS 2012
Clauses 13.5, 13.8 and 15.9 of
the CPS Terms
2.8 Mandatory Conversion on Acquisition Event
SUMMARY
FURTHER
INFORMATION
2.8.1 What is an
Acquisition Event?
ıı
Clauses 13.5, 13.9 and 20.1 of
the CPS Terms
For personal use only
TOPIC
2.8.2 When does
Conversion on
account of an
Acquisition Event
mandatorily occur?
An Acquisition Event will occur where:
––
a takeover bid is made to acquire all or some of the Ordinary Shares and
the offer is, or becomes, unconditional and the bidder has a relevant
interest in more than 50% of the Ordinary Shares on issue; or
––
a court approves a scheme of arrangement under Part 5.1 of the
Corporations Act, which scheme would result in a person having a
relevant interest in more than 50% of the Ordinary Shares that will be on
issue after the scheme is implemented,
and all regulatory approvals necessary for the acquisition to occur have been
obtained.
ıı
Notwithstanding the foregoing, an Acquisition Event will not have occurred
where BOQ is replaced as the ultimate holding company of the BOQ Group by
an Approved NOHC – see Section 2.11.6.
ıı
Subject to the Conversion Conditions, BOQ must Convert CPS if an
Acquisition Event occurs at any time – see Section 2.4 for more information on
the Conversion Conditions.
Clauses 13.5, 13.7 and 13.9 of
the CPS Terms
2.9 Early Conversion, Redemption or Transfer by BOQ
TOPIC
SUMMARY
FURTHER
INFORMATION
2.9.1 What is Early
Conversion,
Redemption or
Transfer?
ıı
Subject to APRA’s prior written approval, BOQ may elect to Convert, Redeem or
Transfer (or a combination of these) some or all of the CPS:
Clauses 13.1 and 13.6 of the
CPS Terms
––
on the Optional Conversion/Redemption Date; or
Section 2.9.4
––
following the occurrence of a Regulatory Event or Tax Event.
2.9.2 When is the
Optional Conversion/
Redemption Date?
ıı
Subject to APRA’s prior written approval, BOQ may elect to Convert all (but not
some only) of the CPS on the occurrence of a Potential Acquisition Event.
ıı
CPS Holders should not expect that APRA’s prior written approval for any such
Conversion, Redemption or Transfer will be given.
ıı
The Optional Conversion/Redemption Date is 15 April 2018.
ıı
On the Optional Conversion/Redemption Date and subject to APRA’s prior
written approval, BOQ may elect to Convert, Redeem or Transfer (or a
combination of these) some or all CPS.
ıı
When under the CPS Terms BOQ has a choice as to whether to Convert,
Redeem or Transfer, that choice will be made by BOQ in its absolute discretion.
The ability to Convert CPS is subject to the Conversion Conditions being
satisfied.
ıı
If BOQ elects to cause the Transfer of CPS to a Nominated Transferee, this will
be at the same price as would apply to Redemption.
Clauses 6.4, 13.1, 13.6 and
16.1 of the CPS Terms
BOQ CPS PROSPECTUS 2012
40
2. ABOUT CPS
ıı
The Conversion Conditions apply to Early Conversion. See Sections 2.4.3 to
2.4.5 for a description of the Conversion Conditions and Maximum Conversion
Number as they apply to Early Conversion.
Clauses 13.2 and 13.3, 13.6,
13.7, 13.8 and 15 of the CPS
Terms
2.9.4 What is a Potential
Acquisition Event?
ıı
A Potential Acquisition Event occurs where:
Clauses 13.6 and 20.1 of the
CPS Terms
For personal use only
2.9.3 What are the
Conversion
Conditions in respect
of Early Conversion?
2.9.5 What is a Tax Event?
2.9.6 What is a Regulatory
Event?
2.9.7 Can CPS Holders
require Early
Conversion,
Redemption or
Transfer?
41
BOQ CPS PROSPECTUS 2012
––
a takeover bid is made to acquire all or some Ordinary Shares and the
bidder has a relevant interest in more than 50% of the Ordinary Shares on
issue and the offer is, or becomes, unconditional except that all regulatory
approvals necessary for the acquisition to occur have not been obtained; or
––
a court orders the holding of meetings to approve a scheme of
arrangement under Part 5.1 of the Corporations Act and the scheme
would result in a person having a relevant interest in more than 50% of
the Ordinary Shares that will be on issue after the scheme is implemented.
ıı
A proposed replacement of BOQ as the ultimate holding company of the BOQ
Group by an Approved NOHC is not a Potential Acquisition Event – see Section
2.11.6.
ıı
A Tax Event will occur if there is a change, amendment or clarification of
laws, treaties or policies (including as a result of a court decision) which
is not expected by BOQ at the Issue Date and BOQ receives an opinion
from a reputable legal counsel or other tax adviser that there is a more than
insubstantial risk that:
ıı
ıı
––
the BOQ Group will incur more than an insubstantial increase in costs in
relation to CPS; or
––
the BOQ Group will incur more than an insubstantial increase in taxes,
duties or government charges in respect of or resulting from the CPS; or
––
CPS will not be treated as equity interests for Australian taxation purposes
or any Dividend will not be frankable or franking debits would be posted
to BOQ’s franking account.
A Regulatory Event will occur if:
––
BOQ receives advice from a reputable legal counsel that as a result of a
change, amendment or clarification of Australian law or regulatory policy
after the Issue Date, additional requirements will be imposed on BOQ in
relation to CPS, or there would be a negative impact on BOQ, in either
case not expected by BOQ before the Issue Date and that BOQ reasonably
determines at its sole discretion to be unacceptable; or
––
BOQ determines, following notice from APRA, that all of the CPS will not
be included (in whole or in part) in BOQ’s Non-Innovative Residual Tier 1
Capital, or Additional Tier 1 Capital, on a Level 1 or Level 2 basis (other
than where such ineligibility is only as a result of any applicable limitation
on the amount or composition of BOQ’s Tier 1 Capital on a Level 1 or
Level 2 basis which is in effect on the Issue Date or is proposed to arise
on or from a given date under APRA’s Basel III Prudential Standards as at
the Issue Date).
CPS Holders do not have a right to require Early Conversion, Redemption or
Transfer.
Clauses 13.6 and 20.1 of the
CPS Terms
Clauses 13.6 and 20.1 of the
CPS Terms
Clause 13.1 of the CPS Terms
2.10Ranking and Voting Rights
SUMMARY
FURTHER
INFORMATION
2.10.1 Ranking on
winding up
ıı
In a winding up of BOQ, CPS rank ahead of Ordinary Shares, equally with
PEPS and other securities or instruments ranking equally with CPS, but behind
all securities or instruments ranking ahead of CPS, and behind all depositors
and other creditors of BOQ.
Clauses 7.2, 13.8 and 15.9 of
the CPS Terms
ıı
If there is a shortfall of funds on a winding up of BOQ to pay all amounts
ranking senior to and equally with CPS, CPS Holders will lose all or some of
their capital.
ıı
Any return in a winding up may be adversely affected if the CPS have been
Converted or Written Off as a result of a Capital Trigger Event or Non-Viability
Trigger Event.
ıı
After Conversion, CPS Holders become holders of Ordinary Shares and will
rank equally with all other Ordinary Shareholders in a winding up.
ıı
After a Write Off, the rights of a CPS to any return of capital in a winding up are
broadly equivalent to the rights of the Ordinary Shares the CPS Holder would
have held if Conversion of the CPS had occurred.
ıı
For the payment of Dividends, CPS rank ahead of Ordinary Shares, equally with
PEPS and other securities or instruments ranking equally with CPS, but behind
all securities or instruments ranking senior to CPS.
ıı
Any return in the form of dividends may be adversely affected if CPS are
Converted or Written Off as a result of a Capital Trigger Event or Non-Viability
Trigger Event.
ıı
CPS Holders have no voting rights at meetings of holders of Ordinary Shares
in BOQ except in the following circumstances:
For personal use only
TOPIC
2.10.2 Ranking for
the Payment of
Dividends
2.10.3 What voting rights
do CPS carry?
2.10.4 Do CPS have rights
to participate
in new share
issues or capital
reconstructions?
ıı
––
during a period in which a Dividend (or part of a Dividend) is in arrears;
or
––
on any proposal:
•
to reduce BOQ’s capital (other than a resolution to approve
Redemption of CPS); or
•
that affects rights attached to the CPS; or
•
to wind-up BOQ; or
•
to dispose of the whole of the property, business and undertaking of
BOQ; or
––
on any resolution to approve terms of a buy-back agreement (other than a
resolution to approve Redemption); or
––
during the winding up of BOQ; or
––
in any other circumstances in which the ASX Listing Rules require
holders of preference shares to be entitled to vote.
CPS do not carry a right for CPS Holders to participate in new issues of, or
capital reconstructions affecting, Ordinary Shares or other BOQ securities.
Clauses 7.1, 13.5. 13.8 and
15.9 of the CPS Terms
Clause 12 of the CPS Terms
Clause 11.1 of the CPS Terms
BOQ CPS PROSPECTUS 2012
42
2. ABOUT CPS
2.11Other
SUMMARY
FURTHER
INFORMATION
2.11.1 Can BOQ issue
further CPS, or other
instruments?
ıı
BOQ reserves the right to issue further preference shares or other securities
which rank behind, equal with or ahead of CPS, whether in respect of
dividends, return of capital in a winding up of BOQ or otherwise.
Clause 11 of the CPS Terms
ıı
CPS do not confer on CPS Holders any right to participate in any new issues of
shares in BOQ’s capital.
ıı
Subject to complying with all applicable laws, BOQ may amend the CPS
Terms without the approval of CPS Holders or Ordinary Shareholders in
certain circumstances. That may include amendments which affect the rights
of CPS Holders, including changes to dates or time periods stated, required
or permitted in connection with any Conversion in a manner necessary or
desirable to facilitate the Conversion. BOQ may make other amendments that
are not likely to be materially prejudicial to the interests of CPS Holders as
a whole.
ıı
BOQ may also amend the CPS Terms if the amendment has been approved by a
Special Resolution.
ıı
Amendments which may affect the treatment of CPS as Additional Tier 1 Capital
require APRA’s prior written approval.
2.11.3 What are
the taxation
implications of
investing in CPS?
ıı
The taxation implications of investing in CPS will depend on an investor’s
individual circumstances. Prospective investors should obtain their own
taxation advice.
ıı
A general outline of the Australian taxation implications is included in the
Australian taxation summary in Section 7.
2.11.4 Is brokerage,
commission or
stamp duty payable?
ıı
No brokerage, commission or stamp duty is payable on Applications for CPS.
ıı
CPS Holders may have to pay brokerage on any subsequent transfer of CPS on
ASX after quotation.
2.11.5 What are the
ongoing costs?
ıı
You will generally not be required to pay any ongoing fees or other costs
following the issue of CPS. The costs of carrying out the Offer and maintaining
an ASX listing for the CPS will be paid by BOQ.
For personal use only
TOPIC
2.11.2 Can BOQ amend the
CPS Terms?
43
BOQ CPS PROSPECTUS 2012
Clause 18 of the CPS Terms
Section 7
Clause 17 of the CPS Terms
Clause 17 of the CPS Terms
For personal use only
2.11.6 What may happen if
a successor holding
company is put in
place?
2.11.7 Shareholder
approval required?
2.11.8 What happens if
the shareholder
approvals are not
obtained?
ıı
If it is proposed that BOQ be replaced as the ultimate holding company of the
BOQ Group by an Approved NOHC and the Approved NOHC agrees to:
––
deliver Approved NOHC Shares under all circumstances when BOQ would
have otherwise been obliged to deliver Ordinary Shares on Conversion;
––
comply with the Distribution Restriction; and
––
use all reasonable endeavours to procure quotation of Approved NOHC
Shares issued under the CPS Terms on the stock exchanges on which
other Approved NOHC Shares are quoted at the time of a Conversion,
Clauses 13.9 and 18.4 to 18.6
of the CPS Terms
Sections 4.2.20 and 8.3
then the CPS Terms may (with APRA’s prior written approval) be amended
to enable the substitution of the Approved NOHC as the issuer of ordinary
shares on Conversion (including following a Mandatory Conversion Date).
BOQ may specify the proposed amendments to the CPS Terms in an Approved
Replacement Notice which, if given, must be given to CPS Holders no later
than 10 Business Days before the Approved NOHC replaces BOQ as the
ultimate holding company of the BOQ Group.
ıı
The replacement, or proposed replacement, of BOQ by an Approved NOHC
is not an Acquisition Event or Potential Acquisition Event and does not allow
BOQ to elect to Convert CPS nor does it entitle CPS Holders to Convert their
CPS. However, the replacement of BOQ by a successor holding company which
is not an Approved NOHC may constitute an Acquisition Event or Potential
Acquisition Event, which may lead to the Conversion of CPS.
ıı
CPS Holders may not have any right to vote on BOQ’s replacement by an
Approved NOHC as the ultimate holding company of the BOQ Group.
ıı
Where BOQ transfers assets to the Approved NOHC or another subsidiary of
the Approved NOHC, BOQ may as a result have reduced assets to meet the
claims of its creditors and shareholders (including CPS Holders).
ıı
Following the substitution of an Approved NOHC as issuer of ordinary shares
on Conversion (but prior to Conversion occurring) CPS Holders continue to
hold preference shares in BOQ which rank for payment of Dividends and in a
winding up of BOQ as described in Section 2.10 but which are Convertible into
Approved NOHC Shares (i.e. ordinary shares in the Approved NOHC) in the
same circumstances in which they would have otherwise been Converted into
Ordinary Shares in BOQ.
ıı
Some of the risks associated with receiving Approved NOHC Shares are
discussed in Section 4.2.20.
ıı
The Offer is conditional on:
––
the issue of CPS for the purposes of ASX Listing Rule 7.1 being approved
by ordinary resolution of Ordinary Shareholders;
––
the CPS Terms being approved and incorporated in the Constitution by
special resolution of Ordinary Shareholders; and
––
the selective buy-back of PEPS as part of the Reinvestment Offer being
approved by special resolution of Ordinary Shareholders.
ıı
If all of the shareholder approvals are not obtained, then the Offer will not
proceed and all Applicants will have their Application Payments refunded
(without interest) as soon as practicable.
ıı
In such a case, no PEPS will be bought back and PEPS Holders will continue
to hold their PEPS.
2.12Comparison of Cps With Peps
CPS and PEPS have some similarities in that they are both preference shares that qualify as Residual Tier 1 Capital for BOQ under APRA’s current capital
adequacy standards. However, they do differ considerably in several key respects, including their classification for the purposes of APRA’s Basel III Prudential
Standards. Section 5.5 includes a table that provides a summary comparison of the CPS and the PEPS.
BOQ CPS PROSPECTUS 2012
44
For personal use only
45
ABOUT BOQ
BOQ CPS PROSPECTUS 2012
3
3. ABOUT BOQ
3.1 Overview of BOQ
For personal use only
3.1.1Introduction
BOQ is a full service financial institution, listed on the ASX, regulated by
APRA as an ADI and currently ranked among the top 100 companies by
market capitalisation on the ASX.
BOQ provides banking and insurance services primarily to retail customers
and small to medium sized business. The principal activities of BOQ and
its controlled entities are the provision of a range of personal and business
banking services and insurance. Insurance services are provided through St
Andrew’s Insurance.
BOQ operates retail branches, business banking centres, equipment,
debtor and vendor finance centres throughout Australia and New Zealand
and distributes insurance. BOQ is a member of the rediATM shared
automated teller machine (ATM) network, which operates over 3,300 ATMs
throughout Australia.
BOQ has its origins in the Brisbane Permanent Benefit Building and
Investment Society which was formed in 1874. Brisbane Permanent
converted from a building society into a bank in 1887. Following various
mergers and acquisitions BOQ was granted a formal commercial banking
licence in 1941 and changed its name to Bank of Queensland Limited
in 1970.
3.1.2Results highlights for the year ended
31 August 2012
In line with guidance provided to the market, BOQ confirmed in its full year
results announcement a statutory full year loss after tax of $17.1 million for
2012, due to increased provisions and one-off legacy expense items.
After posting a statutory loss after tax for the first half to 29 February 2012,
BOQ returned to profitability in the second half to 31 August 2012, with a net
profit after tax of $73.5 million for that half year.
BOQ has 680 branded and co-branded ATMs and 8,972 branded EFTPOS
machines throughout Australia.
29 locations:
12 OMBs
17 Corporate
2 OMBs
163 locations:
113 OMBs
38 Corporate
3 Service Centres
9 Transactions Centres
NT
QLD
WA
SA
NSW/ACT
2 locations:
1 OMB
1 Corporate
37 locations:
36 OMBs
1 Corporate
VIC
TAS
42 locations:
29 OMBs
13 Corporate
(As at 31 August 2012)
2 OMBs
The OMB model is a key part of BOQ’s distribution capability. The Owner
Manager generates retail banking business usually in their local area and
then shares in the success of that business through receiving a percentage
of the net interest income, upfront and trail commissions as well as sharing
in fee and transactional income. BOQ centrally manages brand, credit policy,
pricing, compliance and procedures. OMBs are encouraged to build their
own business and manage their local market and are full service branches.
3.1.4 Business Model
BOQ’s operating model incorporates three business lines: Banking (Retail
and Business & Agribusiness), BOQ Finance and St Andrew’s Insurance.
Other highlights of the 2012 financial results include:
ıı
Fully franked final dividend of 26 cents per Ordinary Share, taking the
dividends for the full year to 52 cents per share
ıı
Normalised underlying profit before tax of $443.5 million and
normalised cash net profit after tax of $30.6 million
ıı
Capital base and liquidity maintained – Core Tier 1 Ratio of 8.5%
ıı
Normalised cash Net Interest Margin (NIM) up 2 basis points to
1.67%, despite a competitive, low credit growth environment
ıı
Retail deposit growth of $1,952.1 million bringing the retail deposit
funding mix to 59%.
3.1.3Presence in Australia and the Owner-Managed
Branch (OMB) model
BOQ operates a widespread network of 277 locations throughout Australia
(as at 31 August 2012). This includes 195 manager-owned branches using
BOQ’s OMB model, 70 corporate branches owned and operated by BOQ,
3 service centres and 9 transaction centres.
Banking
BOQ Finance
Insurance
Banking – Retail
BOQ Retail Banking provides banking and insurance services to households.
BOQ has a comprehensive product offering which encompasses deposit
products such as transactional accounts, saving accounts and term deposits,
and lending products including mortgages, overdrafts, personal lending and
credit card products. BOQ has diversified operations and branches in each
state and territory in Australia and customers have access to rediATMs and
BOQ-branded ATMs across Australia.
Banking – Business & Agribusiness
BOQ, with its long history as a fully licensed commercial bank, has for some
time had a significant proportion of its lending portfolio in the SME sector.
An extensive suite of products is offered to business customers and includes
transactional accounts, treasury and foreign exchange risk management
services, merchant services and lending products such as overdrafts,
commercial loans and trade finance facilities.
BOQ CPS PROSPECTUS 2012
46
3. ABOUT BOQ
For personal use only
BOQ has recently announced to the market that it intends to expand
its Business Banking division to target agribusiness customers across
Australia.
BOQ Finance
3.1.6 Directors of BOQ
BOQ Finance is an established provider of equipment and debtor financing.
On 30 June 2010, BOQ acquired CIT Group (Australia) Limited and CIT
Group (New Zealand) Limited, now renamed to BOQ Finance (Aust) Limited
and BOQ Finance (NZ) Limited respectively. The integration of the CIT
business with BOQ’s much larger existing equipment finance and debtor
finance businesses creates the BOQ Finance division, and provides BOQ
with the opportunity to sell new products into the existing branch network as
well as broker, manufacturers, vendor and dealer distribution channels.
The Directors of BOQ are:
ıı
Neil Summerson, Chairman
ıı
Stuart Grimshaw, Managing Director and Chief Executive Officer
ıı
Steve Crane
ıı
Roger Davis
St Andrew’s Insurance
ıı
Carmel Gray
St Andrew’s Insurance provides consumer credit insurance and life
insurance. BOQ acquired St Andrew’s Insurance (Australia) Pty Ltd and
St Andrew’s Life Insurance Pty Ltd on 1 July 2010. The acquisition of St
Andrew’s Insurance has allowed BOQ to expand its non-interest income
sources. St Andrew’s Insurance is regulated by APRA and although it utilises
the shared services of BOQ, this business operates separately and outside of
BOQ’s extended licensed entity for APRA prudential purposes.
ıı
Richard Haire
ıı
John Reynolds
ıı
Michelle Tredenick
ıı
David Willis
3.1.5Strategy
BOQ is implementing a strategy to create a successful banking model that
is “Fit, Focused and Different” and seeks to offer a compelling alternative
to competitor banks with trusted, simple and straight forward banking via a
multi-channel platform.
To deliver on this strategy, a number of key initiatives are underway around
four key themes:
47
In addition to these initiatives, BOQ will examine opportunities, if they arise,
to acquire complementary businesses that will contribute to the execution of
its strategy.
BOQ CPS PROSPECTUS 2012
The roles and responsibilities of the Directors are set out in the Board
Charter. A description of the Board Charter and further information on the
Directors is available at www.boq.com.au.
On 4 October 2012, BOQ announced that John Reynolds does not intend
to seek re-election at BOQ’s AGM on 13 December 2012 and will retire as a
Director at that meeting.
3.2 Financial information about BOQ
BOQ’s executive management team include:
The summary historical financial information presented in this Section has
been extracted from BOQ’s audited financial statements for the year ended 31
August 2011 and the year ended 31 August 2012.
For personal use only
3.1.7 Management of the businesses of BOQ
ıı
Stuart Grimshaw, Managing Director and Chief Executive Officer*
ıı
Jon Sutton, Chief Operating Officer*
ıı
Anthony Rose, Chief Financial Officer*
ıı
Peter Deans, Chief Risk Officer*
ıı
Brendan White, Group Executive Business Banking, Agribusiness &
Financial Markets*
ıı
Matthew Baxby, Group Executive Retail & Online Banking*
ıı
Renato Mazza, Group Executive Insurance & Chief Executive Officer St
Andrew’s Insurance
ıı
Hugh Lander, Chief Executive Officer BOQ Finance*
* Appointments since November 2011
On 1 November 2011, Stuart Grimshaw joined BOQ as Managing Director
and Chief Executive Officer. Since his appointment, Stuart has assembled a
new management team with significant and broad banking experience.
Further information about BOQ’s executive management team is available at
www.boq.com.au.
3.1.8 Corporate governance of BOQ
The Directors and Management are committed to excellence in corporate
governance and support the Principles of Good Corporate Governance
and Best Practice Recommendations as developed by the ASX Corporate
Governance Council as the basis for enhancing the credibility and
transparency of capital markets.
The historical financial information presented in this Section has been
presented in abbreviated form and does not contain all of the disclosures
usually provided in an annual report prepared in accordance with the
Corporations Act.
BOQ is a disclosing entity for the purposes of the Corporations Act and
is subject to regular reporting and disclosure obligations under the
Corporations Act and the ASX Listing Rules. These include continuous
disclosure obligations.
BOQ’s most recent audited financial report was the annual financial report for
the year ended 31 August 2012, a copy of which can be obtained from www.
boq.com.au and www.asx.com.au.
It is recommended that the annual financial report be read in conjunction
with any announcements made by BOQ and its subsidiaries since 31 August
2012 in accordance with BOQ’s continuous disclosure obligations.
3.2.1Consolidated income statement for the year end
31 August 2012
The following table sets out BOQ’s audited consolidated income statements
for the years ended 31 August 2011 and 31 August 2012.
The notes to the audited consolidated income statements are set out in the
annual financial report for the year ended 31 August 2012.
Further information about BOQ’s corporate governance guidelines and
practices are available at www.boq.com.au.
BOQ CPS PROSPECTUS 2012
48
3. ABOUT BOQ
Consolidated
2011
$m
Interest income
2,596.2
2,676.6
Less: Interest expense
1,944.7
2,053.2
Net interest income
651.5
623.4
Other operating income
111.5
132.1
41.3
40.9
Communication, Postage & Processing Costs
42.9
40.0
Operating expenses
59.9
50.3
Professional Fees & Administrative Expenses
27.8
20.7
Data processing
53.1
47.2
Amortisation, Depreciation & Occupancy Expenses
43.9
28.0
Lease rental
20.4
18.9
165.9
154.9
8.7
8.4
-
5.7
381.7
422.3
227.8
173.5
For personal use only
2012
$m
Net insurance operating income
Less: Expenses
Employee Related Costs
Amortisation – acquired intangibles
Integration costs
Profit before impairment on loans and advances and tax
Less: Impairment on loans and advances
Specific Provision Expense
Collective Provision Expense
173.2
27.0
Profit/(Loss) before income tax
(19.3)
221.8
(2.2)
63.1
(17.1)
158.7
Less: Income tax expense/(benefit)
Profit/(Loss) for the year
The information in this Section 3.2.1 is historical information and is not a forecast of results to be expected in future periods.
3.2.2Pro-forma consolidated balance sheet as at
31 August 2012
The following table sets out the consolidated balance sheet of BOQ as
at 31 August 2012, and the pro-forma consolidated balance sheet as at
31 August 2012 (Pro-Forma Balance Sheet). The notes to the consolidated
balance sheet are set out in BOQ’s annual financial report for the year ended
31 August 2012. The Pro-Forma Balance Sheet is unaudited and has been
prepared using the relevant accounting policies as disclosed in the 31 August
2012 annual financial report and based on the following assumptions:
ıı
49
Pro-forma adjustments prior to the Offer:
––
payment of $4.3 million PEPS dividend on 15 October 2012;
––
$80.3 million final dividend on Ordinary Shares to be paid on
10 December 2012 of which $24.1 million is assumed to be
reinvested into Ordinary Shares pursuant to BOQ’s dividend
reinvestment plan; and
––
redemption of $60 million Lower Tier 2 Convertible Notes
(Tranche 1) at face value made on 12 November 2012.
BOQ CPS PROSPECTUS 2012
ıı
Pro-forma adjustments related to the Offer:
––
$250 million is assumed to be raised through the Offer net of
estimated issue costs of $4.9 million (after tax). BOQ may raise
more or less than this amount through the Offer which would have
a corresponding impact on the Pro-forma Balance Sheet; and
––
$150 million existing PEPS are assumed to be bought back at
face value and exchanged for CPS in the Reinvestment Offer. This
assumption is based on a 75% participation in the Reinvestment
Offer which is believed to be reasonable given the significant
level of PEPS Holders being clients of the Joint Lead Managers or
Co-Managers (or their affiliates) and the higher Margin for CPS
than that which applies for PEPS. The actual amount of PEPS
exchanged could be more or less than this amount which would
have a corresponding impact on the Pro-Forma Balance Sheet.
If all PEPS were bought back and exchanged for CPS (with no
change in the amount raised under the Offer), then BOQ’s pro forma
net assets and pro forma total equity as shown in the Pro-Forma
Balance Sheet would reduce by $50 million to $2,638.7 million.
For personal use only
Reported
2012
$m
Pro-forma
Pro-forma
adjustments adjustments
prior to
related to
the Offer
the Offer
Pro-forma
2012
$m
Note
Assets
Cash and liquid assets
670.5
Due from other financial institutions
119.7
119.7
5,689.4
5,689.4
Other financial assets
Derivative financial instruments
(120.5)
95.1
645.1
276.1
276.1
34,147.2
34,147.2
0.7
0.7
31.0
31.0
Deferred tax assets
125.7
125.7
Other assets
120.9
120.9
Intangible assets
554.6
554.6
22.2
22.2
Loans and advances at amortised cost
Current tax assets
Property, plant and equipment
Investments accounted for using the equity
method
Total assets
41,758.0
(120.5)
95.1
1, 2, 5
41,732.6
Liabilities
Due to other financial institutions
177.8
177.8
31,171.9
31,171.9
Derivative financial instruments
253.0
253.0
Accounts payable and other liabilities
450.4
450.4
Provisions
44.1
44.1
Insurance policy liabilities
73.5
73.5
Deposits
Borrowings including subordinated notes
Convertible Preference Shares
Total liabilities
Net assets
6,688.1
(60.0)
0.0
6,628.1
5
245.1
245.1
2
38,858.8
(60.0)
245.1
39,043.9
2,899.2
(60.5)
(150.0)
2,688.7
2,464.4
24.1
Equity
Issued capital
Perpetual Equity Preference Shares (PEPS)
195.7
Reserves
106.2
Retained profits
132.9
(84.6)
2,899.2
(60.5)
Total Equity
(150.0)
2,488.5
3
45.7
2
106.2
48.3
(150.0)
4
2,688.7
1. Decrease in cash and cash equivalents relates to the payment of the final dividend on Ordinary Shares to be paid on 8 December 2012, the PEPS dividend paid on
15 October 2012 and redemption of Lower Tier 2 Convertible Notes (Tranche 1) made on 12 November 2012.
2. Assumes the issue of $250 million of CPS with net issue costs of $4.9 million (after tax), and the buy-back of $150 million of PEPS at face value and exchanged
for CPS.
3. The increase in share capital relates to the anticipated issue of $24.1 million of Ordinary Shares on 8 December 2012, based on the assumption of 30%
participation in BOQ’s dividend reinvestment plan.
4. The decrease in retained profits relates to the $80.3 million final dividend on Ordinary Shares to be paid on 8 December 2012, and the final dividend of $4.3
million on PEPS paid on 15 October 2012.
5. The decrease in borrowings relates to the Lower Tier 2 Convertible Notes (Tranche 1) that were redeemed on 12 November 2012.
BOQ CPS PROSPECTUS 2012
50
3. ABOUT BOQ
3.3Capital management strategy and capital
ratios
For personal use only
3.3.1 Prudential regulation
APRA is the prudential regulator of the Australian financial services industry.
APRA oversees banks, credit unions, building societies, general insurance
and reinsurance companies, life insurance companies, friendly societies and
most members of the superannuation industry. APRA’s website (www.apra.
gov.au) includes further details of its functions and Prudential Standards.
BOQ is regulated by APRA as an ADI. APRA’s Prudential Standards aim to
ensure that ADIs (including BOQ) remain adequately capitalised to support
the risks associated with their activities and generally to protect Australian
depositors.
BOQ must currently comply with Basel II which is the common name for a
framework issued by the Bank of International Settlements’ Basel Committee
on Banking Supervision (Basel Committee) for the calculation of capital
adequacy for banks worldwide. The Basel Committee has released a series
of consultation papers which propose changes to the Basel II framework –
described below in Section 3.3.2.
3.3.2Proposed changes to regulatory capital
(Basel III)
From 1 January 2013, new Australian regulatory reforms are proposed to
be in effect to implement the Basel Committee’s proposed changes to the
Basel II framework that aim to raise the level and quality of regulatory capital
in the global banking system (Basel III). On 28 September 2012, APRA
released a final set of prudential standards and reporting standards that give
effect to major elements of the Basel III capital reforms in Australia. The final
prudential standards are expected to come into effect on 1 January 2013.
The key features of the Basel III capital reforms that will apply to ADIs in
Australia include:
ıı
a new definition of regulatory capital under which common equity is
the predominant form of Tier 1 Capital;
ıı
a stricter approach to regulatory adjustments under which most
deductions from capital are to be from Common Equity Tier 1 Capital;
ıı
an increase in the minimum amounts of capital that ADIs must hold
against the risks they face: Common Equity Tier 1 Capital must be at
least 4.5% of total risk-weighted assets and the Tier 1 Capital ratio at
least 6%;
ıı
a new capital conservation buffer of 2.5% that places increasing
constraints on capital distributions where an ADI’s capital level falls
within the buffer range;
ıı
a countercyclical buffer of up to 2.5% that will apply when excessive
credit growth and other indicators point to a system-wide build up of
risk; and
ıı
leverage ratio to help contain the build up of leverage in the banking
system.
APRA is introducing the Basel III minimum capital ratios and regulatory
adjustments from 1 January 2013, and the capital conservation buffer and
countercyclical buffer from 1 January 2016. Formerly eligible regulatory
capital instruments of ADIs that do not comply with Basel III requirements
for Additional Tier 1 or Tier 2 Capital will be phased out under transitional
arrangements beginning 1 January 2013.
3.3.3 Prudential capital classification
For capital adequacy purposes, a bank’s capital base is the sum of Tier 1
Capital and Tier 2 Capital, net of specified deductions:
ıı
Under APRA’s current prudential standards, Tier 1 Capital is comprised
of Fundamental Tier 1 Capital and Residual Tier 1 Capital.
ıı
From 1 January 2013, Tier 1 Capital will be comprised of Common
Equity Tier 1 Capital and Additional Tier 1 Capital.
APRA has provided confirmation that CPS will, once issued, be eligible for
inclusion in:
ıı
BOQ’s Residual Tier 1 Capital base under the current prudential
standards, and
ıı
BOQ’s Additional Tier 1 Capital from 1 January 2013.
The effect of the Offer on BOQ’s capital adequacy ratio is set out in
Section 3.3.6.
3.3.4 Capital management strategy
BOQ’s approach to capital management considers the need to balance
efficiency, flexibility and adequacy when determining sufficiency of capital
and when developing capital management plans. The key objectives are to
hold sufficient capital in excess of prudential requirements at levels which
support the risks of BOQ and enable BOQ to pursue business opportunities.
BOQ aims to optimise shareholder value by managing the level, the
composition and use of capital across the business.
3.3.5 Common Equity Tier 1 Capital Ratio
Under APRA’s existing Prudential Standards, BOQ’s Core Tier 1 Ratio was
8.5% as at 31 August 2012. Under the new Basel III Prudential Standards
APRA will replace Fundamental Tier 1 (which forms the numerator of BOQ’s
Core Tier 1 Ratio) and adopt the Basel Committee Basel III definition of
Common Equity Tier 1 Capital. Where APRA’s existing capital treatment is
more conservative than the Basel Committee Basel III rules, APRA proposes
to preserve certain deductions to capital in calculating Common Equity Tier
1 Capital. BOQ estimates that, as at 31 August 2012, its Common Equity
Tier 1 Capital Ratio would be 8.6% based on APRA’s Basel III Prudential
Standards7, which equates to a surplus of capital of approximately A$736.5
million above the Capital Trigger Event level of 5.125%.
7
51
BOQ CPS PROSPECTUS 2012
B OQ only discloses Common Equity Tier 1 Capital at Level 2. The difference between the
calculation at Level 1 and Level 2 is not material. The Basel III Prudential Standards are
expected to come into effect on 1 January 2013.
3.3.6Pro-Forma consolidated capital adequacy position as at 31 August 2012
For personal use only
The following table sets out the pro-forma capital adequacy position based on BOQ’s audited consolidated balance sheet as at 31 August 2012, adjusted for the
pro-forma transactions set out in Section 3.2.2, including the issue of $250 million of CPS as if it was completed as at that date, and assuming $150 million of
PEPS on issue had been exchanged for CPS.
BOQ reported and pro-forma consolidated capital adequacy position
Reported
2012
$m
Pro-forma
Pro-forma
adjustments adjustments Pro-forma
prior to the related to the
2012
offer
offer
$m
Note
Tier 1
Contributed capital
2,464.6
24.1
2,488.7
1
Retained profits & reserves
150.1
(24.1)
126.0
1
Non-innovative Tier 1 Capital (PEPS)
195.7
(150.0)
45.7
2
0.0
245.1
245.1
2
Available for Sale Reserve
Non-innovative Tier 1 Capital (CPS)
Less
Deferred expenditure
(106.8)
(106.8)
Goodwill & other identifiable intangibles
(541.1)
(541.1)
Other deductions
(164.4)
(164.4)
Net Tier 1 Capital
1,998.1
0.0
95.1
2,093.2
Tier 2
General reserve for credit losses
Other
Term subordinated debt
184.2
184.2
8.5
8.5
499.9
(60.0)
439.9
3
Less
Tier 2 deductions
(31.5)
Net Tier 2 Capital
661.1
(60.0)
0.0
601.1
2,659.2
(60.0)
95.1
2,694.3
Total qualifying capital
Total risk weighted assets
21,098.1
(31.5)
21,098.1
1. Increase in share capital relates to the issue of $24.1 million Ordinary Shares pursuant to the dividend reinvestment plan.
2. Assumes the issue of $250 million CPS, with net issue costs of $4.9 million (after tax), adjusted for the redemption of $150 million of PEPS.
3. The decrease in term subordinated debt relates to the Lower Tier 2 Convertible Notes (Tranche 1) that were redeemed on 12 November 2012.
BOQ CPS PROSPECTUS 2012
52
3. ABOUT BOQ
For personal use only
Reported
Pro-forma
Pro-forma
31 August 2012 adjustments8 31 August 2012
Core Tier 1 Ratio
8.5%
0.0%
8.5%
Tier 1 Capital Ratio
9.5%
0.5%
9.9%
Tier 2 Capital Ratio
3.1%
(0.3)%
2.9%
12.6%
0.2%
12.8%
Total regulatory capital ratio
3.4 Liquidity and funding risk management
3.4.1 Liquidity risk management
3.4.2 Funding risk management
Liquidity risk arises from the possibility of BOQ being unable to meet its
financial obligations as they fall due as a result of mismatches in its cash
flows from financial transactions. The BOQ liquidity risk management
framework is reviewed by BOQ’s Asset and Liability Committee, endorsed by
the Board’s Risk Committee and approved by the Board. BOQ’s liquidity risk
management framework uses scenario analysis to model its ability to fund
under both normal and stressed conditions.
BOQ’s Treasury undertakes an annual funding review that outlines the
funding strategy for the coming year. This strategy is continuously reviewed
to take account of changing market conditions, investor sentiment and
estimations of asset and liability growth rates. The strategy is reviewed and
supported by BOQ’s Asset and Liability Committee and endorsed by the
Board’s Risk Committee prior to final approval by the Board.
APRA is currently in the process of revising its Liquidity Risk Prudential
Standard (APS 210) in line with the Basel III liquidity framework. As at
31 August 2012, BOQ held approximately $5.5 billion of High Quality
Liquid Assets, which is approximately $1.5 billion in excess of prudential
requirements. These High Quality Liquid Assets are all eligible for
repurchase agreements with the Reserve Bank of Australia and are readily
liquefiable into cash.
BOQ maintains a contingency funding plan that details the broad actions to
be taken in response to scenarios of severe disruptions in its ability to fund
some or all of its activities in a timely manner and at a reasonable cost. This
plan is reviewed annually and defines a committee of senior executives to
manage a crisis and allocates responsibility to individuals for key tasks.
BOQ’s diverse funding mix is represented in the graph below.
BOQ’s liquidity holdings as a percentage of total liabilities are represented in
the graph below.9
LiquidityLiquidity
(%)
(%)
FundingFunding
mix (%) mix (%)
21.2%
19.6%
4.7%
1.6%
0.9%
1.0%
24.2%
21.2%
7.1%
4.7%
0.7%
1.0%
24.2%
17.1%
15.5%
17.1%
16.4%
15.5%
FY10
FY11
FY10
FY11FY12
19.6%
1.6%
0.9%
HQLA
HQLA
Other Liquids
Other Liquids
Internal RMBS
Internal RMBS
$35.3b $35.3b
$36.3b $36.3b
$37.9b $37.9b
15%12%
17%17%
17%
17%15%
12%13%
17%13%
15%15%
13%
13%
15%
16.4%
51%
51%56%
56%59%
59%
FY12
FY10
FY11
FY10
FY11FY12
FY12
7.1%
0.7%
15%
17%
Retail
Retail
Securitisation
Securitisation
Long term Long
Wholesale
term Wholesale
Short termShort
Wholesale
term Wholesale
8Pro-forma adjustments assume $250 million worth of CPS, less $150 million PEPS bought back at face value and exchanged for CPS and less expected offer costs of $4.9 million (after tax).
BOQ may raise more or less than $250 million through the Offer, and more or less than $150 million of PEPS may be exchanged for CPS, as such, these figures will be impacted accordingly.
Figures do not add due to rounding.
9Internal residential mortgage-backed securities give BOQ the ability to exchange the securities for cash with the RBA to promote liquidity.
53
BOQ CPS PROSPECTUS 2012
For personal use only
4
INVESTMENT
RISKS
BOQ CPS PROSPECTUS 2012
54
4. INVESTMENT RISKS
4.2.2 Ranking of Ordinary Shares
Before applying for CPS, you should consider whether CPS are a suitable
investment for you. You should be aware that there are risks associated with
an investment in CPS, many of which are outside the control of BOQ.
The Ordinary Shares held as a result of any Conversion will, following
Conversion, rank equally with existing Ordinary Shares. Accordingly, the
ongoing value of any Ordinary Shares received upon Conversion will depend
upon the market price of Ordinary Shares after the Mandatory Conversion
Date or other date on which CPS are Converted. That market is also
subject to the factors outlined above and may also be volatile depending on
securities markets conditions at that time.
There are a number of factors, both specific to BOQ and of a general nature,
which may affect the future operating and financial performance of BOQ, its
investment returns and the value of its shares. Many of the circumstances
giving rise to these risks are beyond the control of BOQ.
This Section describes certain specific areas that are believed to be the
major risks associated with an investment in BOQ and in CPS. Each of
the risks described below could, if they eventuate, have a material adverse
effect on BOQ’s operating and financial performance and the value of an
investment in CPS.
These risks factors are set out below. The risks to which CPS are subject
can be categorised as:
ıı
risk associated with investing in CPS;
ıı
risk associated with BOQ; and
ıı
general risks.
The summary of risks below is not exhaustive. You should read this
Prospectus in its entirety and consult your stockbroker, solicitor, accountant
or other professional adviser before deciding whether to apply for CPS.
4.2 CPS specific risks
Set out below are the risks associated with an investment in CPS.
4.2.1 Market price and liquidity of CPS
The market price of CPS may fluctuate due to various factors, including
investor perceptions, Australian and worldwide economic conditions,
interest rates, movements in foreign exchange rates, movements in the
market price of Ordinary Shares or senior or subordinated debt, the
availability of better rates of return on other securities and factors that may
affect BOQ’s financial performance and position.
CPS may trade at a market price below the Face Value. There is no
guarantee that CPS will remain continuously quoted on ASX.
In recent years, securities markets have become more volatile. Volatility
risk is the potential for fluctuations in the price of securities, sometimes
materially, and over a short period. Investing in volatile conditions usually
implies a greater level of volatility risk for investors than an investment in a
more stable market.
Although BOQ intends to have the CPS quoted on ASX, there is no guarantee
that a liquid market will develop for CPS. The market for the CPS is likely to
be less liquid than the market for BOQ’s Ordinary Shares. CPS Holders who
wish to sell their CPS may be unable to do so at an acceptable price, if at all,
if insufficient liquidity exists in the market for CPS.
4.2.3 Fluctuation in Ordinary Share price
The number of Ordinary Shares that CPS Holders receive on Conversion
is calculated by reference to a VWAP for Ordinary Shares during a period
before Conversion. The VWAP may differ from the market price for Ordinary
Shares on or after the date of Conversion. This means that the value of
Ordinary Shares received may be more or less than anticipated when they
are issued or thereafter.
In particular, on Conversion, other than Conversion resulting from a Capital
Trigger Event or Non-Viability Trigger Event, CPS Holders will receive
$101.01 worth of Ordinary Shares per CPS based on the VWAP during a
period before the Mandatory Conversion Date or other date on which CPS
are Converted.
The market price of Ordinary Shares may fluctuate due to various factors,
including investor perceptions, Australian and worldwide economic
conditions and BOQ’s financial performance and position and transactions
affecting the share capital of BOQ. As a result, the value of Ordinary Shares
received upon Conversion may be greater than or less than $101.01 per CPS
when they are issued or thereafter, and could be less than the Face Value.
In relation to Conversion on account of a Capital Trigger Event or a NonViability Trigger Event – see further detail in Sections 2.6 and 2.7.
After Conversion, there may be CPS Holders wishing to dispose of their
Ordinary Shares issued on Conversion which may have a negative effect on
the price at which Ordinary Shares trade on ASX.
4.2.4 Changes in Dividends
The Dividends payable on the CPS are based on a floating rate plus a
fixed Margin.
The Dividends will fluctuate in line with movements in the Bank Bill Swap
Rate. Refer to the chart below for historical movements in the Bank Bill
Swap Rate.
9
8
7
180 day BBSW (% p.a.)
For personal use only
4.1Introduction
6
5
4
3
2
1
0
Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Source: Reuters as at 14 November 2012
Where CPS are Converted, there may be no liquid market for Ordinary
Shares at the time of Conversion or the market for Ordinary Shares may be
less liquid than that for comparable securities issued by other entities at the
time of Conversion.
55
BOQ CPS PROSPECTUS 2012
Note: Historical levels are not indicative of future performance. The above
graph is for illustrative purposes only and does not indicate, guarantee or
forecast the actual BBSW. The actual BBSW for the Dividend Periods may be
higher or lower than the rates in the above graph.
For personal use only
As Dividends fluctuate, there is a risk that they may become less attractive
when compared to the returns available on comparable securities issued by
BOQ or other entities or other investments.
4.2.5 Dividends may not be paid
There is a risk that Dividends will not be paid. Dividends will not be paid if
the Dividend Payment Tests (set out in Section 2.3.8) are not satisfied. The
Dividend Payment Tests require, among other things, that the Directors, in
their absolute discretion, resolve to pay a Dividend. There is a risk that one
or more elements of the Dividend Payment Tests will not be satisfied and
that a Dividend may not be paid in full or at all.
The value and availability of franking credits to a CPS Holder will differ
depending on the CPS Holder’s particular tax circumstances. CPS Holders
should be aware that the potential value of any franking credits does not
accrue at the same time as the receipt of any cash Dividend. CPS Holders
should also be aware that the ability to use the franking credits, either as an
offset to a tax liability or by claiming a refund after the end of the income
year, will depend on the individual tax position of each CPS Holder. CPS
Holders should refer to the Australian taxation summary in Section 7 and
seek professional advice in relation to their tax position.
4.2.7Distributions on CPS may be restricted by the
terms of other similar securities
Dividends on the CPS are non-cumulative. Therefore, if a Dividend is not
paid in full for any particular Dividend Period, CPS Holders will not be
entitled to receive that Dividend and will not receive that Dividend.
The terms of BOQ’s other outstanding and future securities could limit its
ability to make payments on CPS. If BOQ does not make payments on other
securities, payments may not be permitted to be made in respect of CPS.
Further, if BOQ does not pay a Dividend when scheduled, a CPS Holder:
The dividend payment dates on BOQ’s other securities (including any
outstanding PEPS) may differ from the Dividend Payment Dates for CPS.
Further, the payment tests applying to other securities (whether currently
outstanding or issued in the future) may be different to the Dividend
Payment Tests (set out in Section 2.3.8). Accordingly, BOQ may not be
permitted to make a payment on another security in circumstances where
it would otherwise be permitted to make a payment on CPS. In these
circumstances, the distribution restrictions on the other securities may then
apply, preventing BOQ from making a payment on CPS. Similarly, BOQ may
not be permitted to make a payment on CPS in circumstances where the
payment tests on other securities have been passed.
ıı
has no right to apply for BOQ to be wound up or placed in
administration, or to cause a receiver or a receiver and manager to be
appointed in respect of BOQ merely on the grounds that BOQ does not
pay a Dividend when scheduled; and
ıı
will have no right of set-off and no offsetting rights or claims on BOQ.
If for any reason a Dividend has not been paid on a Relevant Dividend
Payment Date, the Distribution Restriction applies under which BOQ must
not, until and including the next Dividend Payment Date:
ıı
declare, determine or pay a dividend or make any distribution on
Ordinary Shares; or
ıı
buy-back or reduce capital on Ordinary Shares,
unless:
ıı
the Dividend is paid in full within three Business Days of the Relevant
Dividend Payment Date;
ıı
all CPS have been Converted or Redeemed; or
ıı
a Special Resolution of the CPS Holders has been passed approving
such action.
In addition, BOQ may be prevented from paying a Dividend by the
requirements of the Corporations Act which say that, in order to pay a
Dividend, BOQ’s assets must exceed its liabilities by an amount sufficient
for payment of the Dividend, that payment must be fair and reasonable to
shareholders as a whole and payment of the Dividend must not materially
prejudice BOQ’s ability to pay its creditors.
Changes in regulations applicable to BOQ (including the Basel III Prudential
Standards as they will apply to BOQ) may impose additional requirements
which prevent BOQ from paying a Dividend in additional circumstances.
If distribution restrictions for another security apply to payments on CPS,
BOQ may not be able to pay Dividends when scheduled to do so under the
CPS Terms and may not be able to Redeem CPS. BOQ is not restricted from
issuing other securities of this kind or agreeing in the terms of issue of other
securities additional or different payment tests or distribution restrictions.
4.2.8The Distribution Restriction is less restrictive
than the PEPS distribution restriction and
applies in limited circumstances
The Distribution Restriction is less extensive than the corresponding
distribution restriction in the PEPS terms of issue. The Distribution
Restriction restricts distributions in respect of Ordinary Shares and not
distributions in respect of the PEPS or any future securities ranking equally
with or junior to CPS (other than Ordinary Shares). Accordingly, a failure to
make a scheduled payment on CPS may not restrict the making of payments
in respect of the PEPS and other instruments that may in the future rank
equally with CPS. Further, the restriction in CPS only applies until the next
Dividend Payment Date. The dates for distribution with respect to Ordinary
Shares are determined by BOQ in its discretion and do not bear a fixed
relationship to the Dividend Payment Dates for CPS. Accordingly, as soon
as the Distribution Restriction ceases to apply (as will be the case if the next
scheduled Dividend on CPS is paid) BOQ will not be restricted from paying
a distribution on its Ordinary Shares.
4.2.6 Dividends may not be fully franked
It is expected that Dividends on CPS will be fully franked. However, it is
possible that Dividends paid on the CPS may not be fully franked. If a
Dividend is not fully franked, it will be grossed up by a cash amount to
compensate for the unfranked amount, subject to the Dividend Payment Tests.
BOQ CPS PROSPECTUS 2012
56
4. INVESTMENT RISKS
4.2.9 Ranking of the CPS
For personal use only
CPS do not represent a deposit liability of BOQ and are not protected
accounts for the purposes of the depositor protection provisions of
Australian banking legislation. CPS are not guaranteed or insured by any
government, government agency or compensation scheme of Australia or
any other jurisdiction. CPS are issued by BOQ on the CPS Terms and CPS
Holders have no claim on BOQ in respect of CPS except as provided in
those CPS Terms. CPS are not secured.
In the event of a winding up of BOQ, the CPS rank:
ıı
behind all depositors or other creditors;
ıı
behind holders of all securities and instruments of BOQ ranking senior
to the CPS in respect of return on capital;
ıı
before Ordinary Shareholders; and
ıı
equal to holders of PEPS and any other securities of BOQ ranking
equally to the CPS in respect of return on capital,
for payment in cash out of surplus assets of an amount equal to the Face
Value plus any Dividend due but unpaid or such other amount determined
as the Liquidation Sum because of a CPS being Written Off, and otherwise
do not confer any right to participate in the surplus assets of BOQ on a
winding up.
If there is a shortfall of funds on a winding up of BOQ to pay all amounts
ranking senior to and equally with CPS, CPS Holders will lose all or some of
their investment.
Any return in a winding up may be adversely affected if your CPS are
required to be Converted or Written Off on account of a Capital Trigger Event
or Non-Viability Trigger Event.
To understand the potential effect on the assets of BOQ available to meet the
claims of a CPS Holder in a winding up of BOQ if there is a replacement of
BOQ as the ultimate holding company of the BOQ Group and the successor
holding company is an Approved NOHC, see Section 2.11.6. CPS Holders
do not have any claim on the assets of an Approved NOHC other than
following Conversion as a holder of ordinary shares in the Approved NOHC.
4.2.10CPS are perpetual and Mandatory Conversion
may not occur on the Scheduled Mandatory
Conversion Date or at all
CPS are scheduled to Convert into Ordinary Shares on 15 April 2020
(subject to the Conversion Conditions being satisfied). However, there is a
risk that Conversion will not occur because the Conversion Conditions are
not satisfied due to a large fall in the Ordinary Share price relative to the
Pre-Issue VWAP, or where a Delisting Event applies. The Ordinary Share
price may be affected by transactions affecting the share capital of BOQ,
such as rights issues, placements, returns of capital, certain buy-backs
and other corporate actions. The Maximum Conversion Number is adjusted
only for transactions by way of a reconstruction and pro-rata bonus issues
of Ordinary Shares (not involving any cash payment or other distribution
to or by Ordinary Shareholders) as described in the CPS Terms and not for
other transactions, including rights issues, placements, returns of capital,
buy-backs or special dividends. The CPS Terms do not limit the transactions
which BOQ may undertake with respect to its share capital and any such
57
BOQ CPS PROSPECTUS 2012
action may affect whether Conversion will occur and may adversely affect the
position of CPS Holders.
If Mandatory Conversion does not occur on the Scheduled Mandatory
Conversion Date, Mandatory Conversion would then occur on the next
Dividend Payment Date on which all of the Conversion Conditions are
satisfied unless CPS are otherwise Converted or Redeemed on or before
that date. If Mandatory Conversion does not occur on a possible Mandatory
Conversion Date and CPS are not otherwise Converted or Redeemed,
Dividends may continue to be paid on CPS, subject to the Dividend
Payment Tests.
CPS are a perpetual instrument. If the Ordinary Share price deteriorates
significantly and never recovers, it is possible that the Conversion
Conditions will never be satisfied and, if this occurs, unless CPS are
otherwise Converted, CPS will never Convert.
4.2.11Redemption, Conversion or Transfer at BOQ’s
initiation
The CPS are perpetual securities and CPS Holders do not have a right to
require BOQ to Convert, Redeem or Transfer their CPS. BOQ may, subject
to APRA approval, initiate Conversion, Redemption or Transfer under
certain circumstances, as set out in Section 2.9. The timing of this may not
coincide with your individual preference, which may be disadvantageous in
light of market conditions or your individual circumstances at the time.
Where you receive cash on Redemption, the rate of return on which you
could re-invest your funds may be lower than the Dividend Rate at the time.
CPS Holders should not expect that APRA will give its approval to any
Conversion, Redemption or Transfer.
The choice of Conversion is also subject to the Conversion Conditions, as
set out in Section 2.4.3. If the requirements for Conversion Conditions are
not satisfied, BOQ will notify ASX and CPS Holders and will not Convert
CPS on the Optional Conversion/Redemption Date or other potential
Conversion Date.
The choice of Redemption is subject to the condition that APRA is satisfied
that either the CPS which are the subject of the Redemption are replaced
concurrently or beforehand with Tier 1 Capital of the same or better quality
and the replacement of CPS is done under conditions that are sustainable
for BOQ’s income capacity, or that BOQ’s capital position is well above its
minimum capital requirements after BOQ elects to Redeem the CPS. BOQ
is not permitted to elect to Redeem CPS in respect of a Potential Acquisition
Event or following a Capital Trigger Event or Non-Viability Trigger Event.
4.2.12 Conversion on an Acquisition Event
BOQ, the issuer of CPS, is an ASX-listed company and may be affected by
merger and acquisition activity, including the possibility of being acquired
by, or merged with, another company or group of companies, potentially
resulting in a change of control.
Where this corporate activity constitutes an Acquisition Event, as defined in
the CPS Terms, subject to certain conditions, BOQ is required to Convert all
CPS in accordance with the CPS Terms. Conversion may occur on dates not
previously contemplated by CPS Holders, which may be disadvantageous
in light of market conditions or their individual circumstances and may not
For personal use only
coincide with their individual preference in terms of timing. This also means
that the period for which CPS Holders will be entitled to the benefit of the
rights attaching to CPS (such as Dividends) is unknown.
In addition, if an Acquisition Event occurs and the Conversion Conditions
are not satisfied, and so the CPS do not Convert, CPS Holders may be left
holding CPS and Conversion may never occur.
The Conversion Conditions do not apply in this circumstance so you may
receive Ordinary Shares worth significantly less than $101.01.
(b)
Inability Event and Write Off
Except for Conversion on account of a Capital Trigger Event or Non-Viability
Trigger Event, if any of the Conversion Conditions are not satisfied, then a
Conversion Date will be deferred until the next Dividend Payment Date in
respect of which all of the Conversion Conditions are satisfied.
If BOQ is prevented by applicable law, order of any court or action of any
regulatory authority (including regarding the insolvency, winding up or
other external administration of BOQ) or any other reason from converting
CPS which would otherwise be converted (referred to as an Inability Event),
and Conversion has not been effected within 5 days of the relevant Capital
Trigger Event or Non-Viability Trigger Event, to the extent that Inability Event
prevents BOQ from Converting CPS that would otherwise be Converted,
those CPS will not be Converted and their rights will be adjusted resulting in
the CPS being Written Off (see Sections 2.6 and 2.7).
Although one condition to Conversion is that a Delisting Event does not
apply, other events and conditions may affect the ability of CPS Holders
to trade or dispose of the Ordinary Shares issued on Conversion (e.g.
the willingness or ability of ASX to accept the Ordinary Shares issued on
Conversion for quotation or any practical issues which affect that quotation),
any disruption to the market for the Ordinary Shares or to capital markets
generally, the availability of purchasers for Ordinary Shares and any costs
or practicalities associated with trading or disposing of Ordinary Shares at
that time.
This means that the rights of a CPS Holder in respect of dividends and
returns of capital in any subsequent winding up of BOQ are broadly
equivalent to the rights in respect of dividends and returns of capital of a
holder of the number of Ordinary Shares the CPS Holder would have held if
the Conversion had occurred. However the CPS in these circumstances are
not identical to Ordinary Shares, do not have the voting rights of Ordinary
Shares, may not be able to be sold at the same price as the equivalent
number of Ordinary Shares or at all, and may be worth much less than your
original investment.
4.2.14A Capital Trigger Event or Non-Viability Trigger
Event may occur
The laws under which an Inability Event may arise include laws relating to
the insolvency, winding up or other external administration of BOQ. Those
laws and the grounds on which a court or government authority may make
orders preventing the Conversion of CPS may change and the change may
be adverse to the interests of CPS Holders.
4.2.13 Conditions for Conversion
A Capital Trigger Event occurs if the BOQ Group’s Common Equity Tier 1
Capital (or until 1 January 2013, Fundamental Tier 1 Capital) to total risk
weighted assets (each as determined by BOQ or APRA at any time) falls
to, or below, 5.125%, calculated on a Level 1 or Level 2 basis. On such an
event, the CPS are Mandatorily Converted.
A Non-Viability Trigger Event occurs when APRA notifies BOQ in writing that
it believes conversion or write off of all or some CPS (and other Relevant
Tier 1 Capital Instruments specified in the determination) is necessary
because:
ıı
without conversion or write off, BOQ would become non-viable; or
ıı
without a public sector injection of capital, or equivalent support, BOQ
would become non-viable.
APRA has not provided guidance as to how it would determine non-viability
but it would be expected to include serious impairment of BOQ’s financial
position and insolvency. It is possible that APRA’s view of non-viability may
not necessarily be constrained to solvency measures or capital ratios and
may include funding and liquidity levels.
The general risks set out in Section 4.3 related to BOQ’s business may have
a bearing on whether APRA forms a view that BOQ is non-viable.
(a)Consequences of a Capital Trigger Event or Non-Viability
Trigger Event
Details of the consequences of the occurrence of a Capital Trigger Event or
Non-Viability Trigger Event are set out in Sections 2.6 and 2.7. These terms
are intended to provide an advanced framework for the treatment of CPS
Holders in the event of a Capital Trigger Event or Non-Viability Trigger Event
and include a requirement to immediately convert all or some of the CPS.
(c)
Mitigation of the risk of such events
BOQ proactively manages its capital, funding and liquidity positions to
avoid experiencing financial difficulty. See Sections 3.3 and 3.4 for further
information on BOQ’s capital, funding and liquidity positions.
4.2.15 Changes to credit ratings
BOQ’s cost of funds, margins, access to capital markets and competitive
position and other aspects of its performance may be affected by its credit
ratings (including any long-term credit ratings or the ratings assigned to
any class of its securities). Credit rating agencies may withdraw, revise or
suspend credit ratings or change the methodology by which securities are
rated. Even though CPS will not be rated, such changes could adversely
affect the market price, liquidity and performance of CPS or Ordinary Shares
received on Conversion.
4.2.16 Regulatory classification
APRA has provided confirmation that the CPS qualify as Non-Innovative
Residual Tier 1 Capital under current Prudential Standards at the date of this
Prospectus and will be eligible for inclusion in Additional Tier 1 Capital from
1 January 2013, which is the date when APRA’s Basel III Prudential Standards
are expected to become effective. However, if APRA subsequently determines
that the CPS are not or will not qualify as those categories of regulatory
capital, BOQ may decide that a Regulatory Event has occurred. This will allow
Conversion, Redemption or Transfer (subject to APRA’s prior written approval)
at BOQ’s discretion.
BOQ CPS PROSPECTUS 2012
58
4. INVESTMENT RISKS
For personal use only
The timing of Conversion, Redemption or Transfer may not coincide with
your individual preference, and may be disadvantageous in light of market
conditions or your individual circumstances at the time.
4.2.17 Taxation treatment and consequences
A general description of the taxation consequences for an Australian resident
of investing in CPS is set out in Section 7. This discussion is in general
terms and is not intended to provide specific advice in relation to the
circumstances of any particular investor. Accordingly, investors should seek
independent advice in relation to their individual tax position.
If there is a change of law, policy or practice that adversely affects the tax
position of BOQ, a Tax Event may occur. This may give BOQ the right
(subject to APRA’s prior written approval) to elect to Convert, Redeem or
Transfer CPS.
The timing of Conversion, Redemption or Transfer may not coincide with
your individual preference, and may be disadvantageous in light of market
conditions or your individual circumstances at the time.
4.2.18 Accounting standards
A change in accounting standards applicable to BOQ’s financial reporting
may affect the reported earnings and financial position of BOQ in future
financial periods. This may adversely affect the ability of BOQ to make
Dividend payments with respect to CPS.
4.2.19Future issues or redemptions of securities by
the Issuer
BOQ may in the future issue securities that:
ıı
rank for dividends or payments of capital (including on the winding up
of BOQ) equally with, behind or ahead of CPS;
ıı
have the same or different dividend, interest or distribution rates as
those for CPS;
ıı
have payment tests and distribution restrictions or other covenants
which affect CPS (including by restricting circumstances in which
Dividends can be paid or CPS can be Converted, Redeemed or
Transferred); or
ıı
have the same or different terms and conditions as CPS.
BOQ may incur further indebtedness and may issue further securities
including further Tier 1 Capital securities before, during or after the issue
of CPS.
No prediction can be made as to the effect, if any, such future issues of
securities by BOQ may have on the market price or liquidity of CPS.
An investment in CPS carries no right to participate in any future issue of
securities (whether equity, Tier 1 Capital, subordinated or senior debt or
otherwise) by BOQ.
BOQ may redeem or otherwise repay existing securities including existing
equal or junior ranking Tier 1 Capital securities before, during or after the
issue of CPS. An investment in CPS carries no right to be redeemed or
otherwise repaid at the same time as BOQ redeems or otherwise repays
other securities (whether equity, Tier 1 Capital, subordinated or senior debt
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BOQ CPS PROSPECTUS 2012
or otherwise). No prediction can be made as to the effect, if any, which the
future redemption or repayment by BOQ of existing securities may have on
the market price or liquidity of CPS or on BOQ’s financial position
or performance.
4.2.20 NOHC Event
Under the CPS Terms, certain events which would otherwise constitute
an Acquisition Event are instead treated as NOHC Events. Where a NOHC
Event occurs and certain other conditions are satisfied, the NOHC Event
will not trigger a Conversion of CPS but will instead allow BOQ to make
amendments to substitute the Approved NOHC as the issuer of the ordinary
shares issued on Conversion and will permit BOQ to make certain other
amendments to the CPS Terms. Accordingly, potential investors should
be aware that, if a NOHC Event occurs and a substitution of the issuer of
the ordinary shares on Conversion is effected under the CPS Terms, CPS
Holders will be obliged to accept the Approved NOHC ordinary shares and
will not receive Ordinary Shares on Conversion.
Potential investors should also be aware that CPS Holders may not have a
right to vote on any proposal to approve, implement or give effect to a NOHC
Event. BOQ has made no formal decision to implement a NOHC structure.
Following a NOHC Event, BOQ would continue to be regulated by APRA.
However, depending on the structure of the acquirer following a NOHC
Event and the capital framework which APRA determines to apply to it, the
composition of BOQ’s capital measurement levels may be affected, which
in turn may affect the likelihood of BOQ having sufficient available funds to
enable Dividends to be paid on CPS.
After a NOHC Event, CPS Holders will remain preference shareholders in
BOQ with the same rights to dividends and to payment in a winding up
of BOQ as before the NOHC Event, but on Conversion, CPS Holders will
receive ordinary shares in the Approved NOHC and not Ordinary Shares
in BOQ. CPS are expected to remain quoted on ASX, but BOQ’s Ordinary
Shares will cease to be quoted.
Where a NOHC Event is accompanied by a transfer of assets from BOQ or
a subsidiary to the Approved NOHC or another subsidiary of the Approved
NOHC, BOQ may as a result have reduced assets which may affect its credit
rating and the likelihood CPS Holders will receive their claims in full if
BOQ is wound up. CPS Holders do not have any claim on the assets of the
Approved NOHC or any other subsidiary of the Approved NOHC other than
following Conversion as a holder of ordinary shares in the Approved NOHC.
4.2.21 Powers of an ADI statutory manager
In certain circumstances APRA may appoint a statutory manager to take
control of the business of an ADI, such as BOQ. Those circumstances are
defined in the Banking Act to include:
(a)where the ADI informs APRA that it is likely to become unable to
meet its obligations, or is about to suspend payment or becomes
unable to meet its obligations or suspends payment;
(b)where APRA considers that, in the absence of external support
the ADI may become unable to meet its obligations, the ADI may
suspend payment, it is likely that the ADI will be unable to carry
on banking business in Australia consistently with the interests of
its depositors or it is likely that the ADI will be unable to carry on
banking business in Australia consistently with the stability of the
financial system in Australia;
For personal use only
(c)where, in certain circumstances, the ADI is in default of compliance
with a direction by APRA to comply with the Banking Act or
regulations made under it and the Federal Court authorises APRA to
assume control of the ADI’s business.
The powers of an ADI statutory manager include the power to alter an ADI’s
constitution, to issue, cancel or sell shares (or rights to acquire shares) in the
ADI and to vary or cancel rights or restrictions attached to shares in a class of
shares in the ADI. The ADI statutory manager is authorised to do so despite the
Corporations Act, the ADI’s constitution, any contract or arrangement to which
the ADI is party or the ASX Listing Rules. In the event that a statutory manager
is appointed to BOQ in the future, these broad powers of an ADI statutory
manager may be exercised in a way which adversely affects the rights attaching
to the CPS and the position of CPS Holders.
CPS Holders should take care to ensure that by acquiring any CPS (taking
into account any Ordinary Shares into which they may Convert), CPS
Holders do not breach any applicable restrictions on ownership.
4.2.25CPS Holders may be subject to FATCA
withholding and information reporting
BOQ may in certain circumstances amend the CPS Terms without
the approval of CPS Holders. These include necessary or desirable
amendments to dates and time periods to facilitate any Conversion or any
other change which BOQ considers not likely to be materially prejudicial
to the interests of CPS Holders as a whole. BOQ may also amend the
CPS Terms if the amendment has been approved by a Special Resolution.
Amendments which may affect the treatment of CPS as Additional Tier 1
Capital require APRA’s prior written approval.
It is possible that, in order to comply with FATCA, BOQ (or if CPS are held
through another financial institution, such other financial institution) may
be required (pursuant to an agreement with the US Internal Revenue Service
(IRS) or under applicable law) to request certain information from CPS
Holders or beneficial owners of CPS, which information may be provided
to the IRS, and to withhold US tax on some portion of payments made after
31 December 2016 with respect to CPS if such information is not provided
or if payments are made to certain foreign financial institutions that have
not entered into a similar agreement with the IRS (and are not otherwise
required to comply with the FATCA regime under applicable laws or are
otherwise exempt from complying with the requirement to enter into a FATCA
agreement with the IRS). If BOQ or any other person is required to withhold
amounts under or in connection with FATCA from any payments made in
respect of CPS, CPS Holders and beneficial owners of CPS will not be
entitled to receive any gross up or additional amounts to compensate them
for such withholding. This description is based on guidance issued to date
by the IRS, including recently issued proposed regulations. Future guidance
may affect the application of FATCA to CPS.
Amendments under these powers are binding on all CPS Holders despite the
fact that a CPS Holder may not agree with the amendment.
4.3 BOQ Group specific risks
4.2.22 Amendment of CPS Terms
4.2.23Exposure to BOQ’s financial performance
and position
If BOQ’s financial performance or position declines, or if market participants
anticipate that it may decline, an investment in CPS could decline in value
even if CPS have not been Converted. Accordingly, when you evaluate
whether to invest in CPS you should carefully evaluate the investment risks
associated with an investment in BOQ – see Section 4.3.
4.2.24 Shareholding limits
The Financial Sector (Shareholdings) Act 1998 (Cth) restricts ownership
by people (together with their associates) of authorised deposit taking
institutions, such as BOQ, to a 15% stake. A shareholder may apply to the
Treasurer to extend their ownership beyond 15%, but approval will not be
granted unless the Treasurer is satisfied that a holding by that person greater
than 15% is in the national interest.
Mergers, acquisitions and divestments of Australian public companies
listed on ASX (such as BOQ) are regulated by detailed and comprehensive
legislation and the rules and regulations of ASX. These provisions include
restrictions on the acquisition and sale of relevant interests in certain
shares in an Australian listed company under the Corporations Act and
a requirement that acquisitions of certain interests in Australian listed
companies by foreign interests are subject to review and approval by the
Treasurer. In addition, Australian law also regulates acquisitions which
would have the effect, or be likely to have the effect, of substantially
lessening competition in a market.
These limits may prevent the CPS of a CPS Holder being Converted and
therefore cause them to be Written Off in the event of a Capital Trigger Event
or Non Viability Trigger Event.
Set out below are the risks associated with an investment in BOQ.
4.3.1 Market risk
Market risk is the risk that movements in market rates, prices and credit
spreads will result in a loss of earnings to BOQ.
(a)
Funding risk is the risk of over-reliance on a particular funding
source, including securitisation, affecting the volatility in the
cost or availability to BOQ of funds. Post the Lehman Brothers’
collapse and the onset of the global financial crisis in 2008 global
and domestic credit and capital markets have generally seen
higher wholesale cost of funds and in some cases reduction in
the availability of funding sources. BOQ has maintained a well
diversified wholesale funding base, preventing overreliance on one
funding source. BOQ diversifies wholesale borrowing through the
interbank market, securitisation and short and long term senior debt
both domestically and offshore.
If BOQ’s sources of funding prove to be insufficient or so expensive
as to be uncompetitive, it may be forced to seek alternative
funding arrangements or curtail its business operations and limit
loan growth. The ability for BOQ to secure alternative funding
will depend on a variety of factors, including prevailing market
conditions, the availability of credit and BOQ’s credit ratings.
(b)
Interest rate risk arises from a variety of sources, including
mismatches between the repricing periods of assets and liabilities.
As a result of these mismatches, movements in interest rates may
affect earnings or the value of BOQ.
BOQ CPS PROSPECTUS 2012
60
4. INVESTMENT RISKS
For personal use only
(c)
(d)
Currency risk is the risk of loss of earnings due to adverse
movements in foreign exchange rates. BOQ’s foreign exchange rate
exposures are managed through detailed policies set by the Board
and monitored by BOQ’s Asset and Liability Committee and BOQ’s
treasury department.
Counterparty risk is the risk that BOQ’s counterparties are unable to
honour their contractual obligations. A counterparty may default on
its obligations due to bankruptcy, lack of liquidity, operational failure
or other reasons. This risk may arise, for example, from entering
into swap contracts under which counterparties have obligations
to make payments to BOQ executing trades that fail to settle at the
required time due to non-delivery by the counterparty or systems
failure by clearing agents, exchanges, clearing houses or other
financial intermediaries. Such counterparty risk is more acute in
difficult market conditions where the risk of failure of counterparties
is higher.
BOQ continues to review its pricing model and funding mix in light of market
conditions to ensure products are appropriately priced.
4.3.2 Credit and impairment risk
As a financial institution, BOQ is exposed to the risks associated with
extending credit to other parties. Credit risk is the risk of financial loss
arising from a debtor or counterparty failing to meet their contractual
debts and obligations or the failure to recover the recorded value of
secured assets.
BOQ’s lending activities cover a broad range of sectors, customers and
products, including mortgages, consumer loans, commercial loans
(including commercial property), equipment finance, vendor finance, debtor
finance and other finance products. Less favourable economic or business
conditions or deterioration in commercial and residential property markets,
whether generally or in a specific industry sector or geographic region,
could cause customers to experience an adverse financial situation, thereby
exposing BOQ to the increased risk that those customers will fail to meet
their obligations in accordance with agreed terms.
Recent market and economic conditions have led to significantly increased
impairment charges for BOQ in 2012, and if these conditions deteriorate
further, some customers and counterparties may experience continued
higher levels of financial stress. As a result, BOQ has experienced an
increase in defaults and write-offs and has increased its bad and doubtful
debt provisioning. Should these provisions prove inadequate there
may be a further adverse impact on BOQ’s financial performance and
financial position.
4.3.3A weakening of the real estate market in
Australia or Queensland may adversely affect
BOQ’s business, operations and financial
condition
Residential and commercial property lending, together with property
finance, including real estate development and investment property finance,
constitute important businesses to BOQ. Overall, the performance of the
property market has been variable and in some locations there have been
substantially reduced asset values over the past one to two years.
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BOQ CPS PROSPECTUS 2012
A further decrease in property valuations in Australia, and in Queensland
in particular, or other markets where BOQ does business could decrease
the amount of new lending BOQ is able to write or increase the losses
that BOQ may experience from existing loans, which, in either case,
could materially and adversely impact BOQ’s financial condition and
results of operations. A continued significant slowdown in the Australian
or Queensland housing market could adversely affect BOQ’s business,
operations and financial condition.
4.3.4 Liquidity risk
Liquidity risk arises from the possibility of BOQ being unable to meet its
financial obligations as they fall due as a result of mismatches in its cash
flows from financial transactions. Liquidity risk is managed through a series
of detailed policies, including the management of cash flow mismatches,
the maintenance of a stable, core retail deposits base, the diversification of
the funding base and the retention of adequate levels of High Quality Liquid
Assets. In accordance with global regulatory reviews of liquidity, APRA is
currently reviewing its regulation of liquidity under Australian Prudential
Standard APS 210 - Liquidity, which may require BOQ to alter its liquidity
management framework. BOQ’s liquidity risk management framework models
its ability to fund under both normal conditions and during a crisis situation.
This approach is designed to ensure that BOQ’s funding framework is
sufficiently flexible to ensure liquidity under a wide range of market
conditions. Any uncertainty in the availability of funding from financial
markets may increase liquidity risks to BOQ and financial institutions
generally under both normal conditions and during a crisis situation, as
discussed above under Section 4.3.1 (Market risk).
4.3.5 Operational risk
Operational risk is the risk of loss, other than those captured in the credit
and market risk categories, resulting from inadequate or failed internal
processes, people or systems, or from external events. BOQ is exposed to a
variety of risks including those arising from process error, fraud, technology
failure, security and physical protection, franchise agreements entered into
with owners of OMBs, customer services, staff skills and performance and
product development and maintenance. BOQ manages this risk through
appropriate reporting lines, defined responsibilities, policies and procedures
and an operational risk program incorporating regular risk monitoring and
reporting by each business unit. Operational risks are documented in risk
databases which provide the basis for business unit and bank-wide risk
profiles, the latter being reported to the Board on a regular basis. Although
these steps are in place, there is no guarantee that BOQ will not suffer loss
as a result of these risks.
BOQ’s ability to attract and retain suitably qualified and skilled employees
is an important factor in achieving its strategic objectives. BOQ may in the
future have difficulty attracting highly qualified people to fill important roles,
which could adversely affect its business, operations and financial condition.
4.3.6 Insurance business
St Andrew’s Insurance provides consumer credit insurance and life
insurance. These insurance contracts involve the acceptance of significant
insurance risk including those where the insured benefit is payable on the
occurrence of a specified event such as death, injury or disability caused
by accident or illness, or involuntary unemployment. The insured benefit
is not linked to the market value of the investments held for the purpose of
For personal use only
meeting that benefit and any financial risks are substantially borne by the
separately prudentially regulated insurance entities within the BOQ Group,
of which BOQ is the ultimate shareholder. This risk is largely mitigated by
the insurance entities employing conservative investment strategies with
little capital value at risk. Any reduction in the value of those investments
and any increase in claims could adversely affect the financial performance
and position of the insurance entities and the consolidated BOQ Group. In
such an event, BOQ Group’s provisions for insurance liabilities may prove
inadequate to cover the ultimate liability for claims or other policy benefits,
which may adversely affect the financial performance and position of BOQ.
4.3.7 Reliance on external parties
BOQ’s operations depend on performance by a number of external parties
under contractual arrangements with BOQ. As at 31 August 2012,
approximately 70% of BOQ’s branches are Owner Managed Branches. Nonperformance of contractual obligations and poor operational performance
of OMBs may have an adverse effect on BOQ’s business and financial
performance. In addition, BOQ outsources a number of operational services
such as information technology and banking platforms, and a number of
customer facing products such as ATMs, credit cards, general insurance
products and wealth management services. Although BOQ has taken steps
to protect it from the effects of defaults under these arrangements, such
defaults may have an adverse effect on BOQ’s business continuity and
financial performance.
4.3.8Changes in regulation and government policy
BOQ is subject to substantial regulatory and legal oversight in Australia.
The agencies with regulatory oversight of BOQ and its subsidiaries include,
among others, APRA, the RBA, ACCC, ASX and ASIC. Failure to comply
with legal and regulatory requirements may have a material adverse effect on
BOQ and its reputation among customers and regulators and in the market.
Changes to laws, regulations, policies or accounting standards, including
changes in interpretation or implementation of laws, regulations, policies
or accounting standards, could affect BOQ in substantial and unpredictable
ways. These may include required levels, or the measurement, of bank
liquidity and capital adequacy, limiting the types of financial services and
products that can be offered, and/or reducing the fees which banks can
charge on their financial services.
4.3.9 Basel III
Basel III is a comprehensive set of reform measures, developed by the Basel
Committee, to strengthen the regulation, supervision and risk management
of the banking sector globally. The proposed implementation of Basel III
initiatives by APRA, particularly with respect to capital adequacy principles,
may result in changes to BOQ’s capital adequacy ratio. BOQ is working with
APRA to determine if any changes to BOQ’s business, including funding
sources and levels of liquidity, will need to be made in the future to comply
with the proposed changes expected to come into effect from 1 January
2013. See Section 3.3.2 for an explanation of the Basel III changes to
regulatory capital.
4.3.10 LAGIC
APRA is implementing revised capital standards for general insurers and
life insurers, referred to as LAGIC, with final Prudential Standards due to
come into effect on 1 January 2013. The intention of LAGIC is to bring
greater consistency and risk sensitivity to capital frameworks for general
insurers and life insurers. These revised standards may require changes to
investment and reinsurance arrangements as well as to the capital held by
St. Andrew’s Insurance.
4.3.11 Changes in technology
Technology plays an increasingly important role in the delivery of financial
services to customers in a cost effective manner. BOQ’s ability to compete
effectively in the future will, in part, be driven by its ability to maintain an
appropriate technology platform for the efficient delivery of its products
and services.
4.3.12 Industry competition
There is substantial competition for the provision of financial services in the
markets in which BOQ operates. The effect of competitive market conditions
may adversely impact the earnings and assets of BOQ. These competitive
pressures may occur at other levels, such as the competition for acceptable
wholesale funding discussed above.
4.3.13 Risks to BOQ’s growth strategy
Risks that relate to BOQ’s growth strategy are interrelated and include risk of
local market saturation, risks associated with geographical diversification,
changes in wholesale funding markets and changes in general economic
conditions.
(a)
R isk of local market saturation: Despite the size of the Queensland
market, BOQ faces the challenge of maintaining a high penetration
rate in that market in order to achieve continued growth. In addition,
BOQ will continue to be exposed to fluctuations in the Queensland
economy and property market in particular.
(b)
Risk of geographical diversification: Through the mergers with
Pioneer Permanent Building Society (North Queensland) in 2006
and Home Building Society (Western Australia) in 2007 and organic
growth in other states, BOQ has expanded its geographical presence
and distribution in Australia. This brings challenges to BOQ’s
management and control systems as it continues to develop as a
more geographically diverse organisation.
(c)
Funding for growth: Changes in wholesale funding markets may
cause an inability to raise sufficient wholesale funds to fund BOQ’s
asset growth strategies (see Section 4.3.1 (Market risk), which
details BOQ’s funding risks).
(d)
Effect of economic conditions: General economic conditions in
Australia and Queensland in particular may worsen which could
stifle credit growth and restrict BOQ’s ability to grow in line with its
growth strategy (see Section 4.4.1, which explains risks associated
with general economic conditions).
BOQ CPS PROSPECTUS 2012
62
4. INVESTMENT RISKS
4.3.16Reputation
BOQ may engage in merger or acquisition activity which facilitates BOQ’s
strategic direction. Whilst BOQ recognises that benefits may arise from
merger or acquisition activities, significant risks exist in both the execution
and implementation of such activities.
Reputation risk may arise through the actions of BOQ and adversely affect
perceptions of BOQ held by the public, shareholders, regulators or rating
agencies. These issues include appropriately dealing with potential conflicts
of interests, legal and regulatory requirements, ethical issues, money
laundering laws, trade sanctions legislation, privacy laws, information
security policies and sales and trading practices. Damage to BOQ’s
reputation may have an adverse impact on BOQ’s financial performance,
capacity to source funding and liquidity, cost of sourcing funding and
liquidity and by constraining business opportunities.
For personal use only
4.3.14 Mergers and acquisitions
It is likely that BOQ would raise additional debt or raise equity to finance any
major merger or acquisition and this would cause BOQ to face the financial
risks and costs associated with additional debt or equity.
Changes in ownership and management may result in impairment of
relationships with employees and customers of the acquired businesses.
Depending on the type of transaction, it could take a substantial period of
time for BOQ to realise the financial benefits of the transaction, if any. During
the period immediately following this type of transaction, BOQ’s operating
results may be adversely affected.
As a target in any future merger or acquisition activity the issues identified
above may also be relevant. For a discussion of the consequences of an
Acquisition Event or Potential Acquisition Event under the CPS Terms (see
Sections 2.8 and 2.9).
BOQ’s failure to adequately manage the risks associated with any mergers or
acquisitions could adversely affect BOQ’s businesses, financial performance,
financial condition and prospects.
4.3.15Disputes
In the course of its operations, BOQ may be involved in disputes and
possible litigation. BOQ is party to a number of actions in NSW courts
commenced by former owners of OMBs. The claims include allegations of
misleading and deceptive conduct by BOQ. BOQ is vigorously defending the
actions and counter claiming. The amount of any potential liability BOQ may
have is not able to be ascertained at this time but is not presently regarded
as material. There is a risk that any material or costly dispute or litigation
could adversely affect the value of the assets or future financial performance
of BOQ.
Given its franchise model, BOQ is from time to time threatened with, or made
a party to, litigation commenced by franchisees. BOQ is, however, not aware
of any current matters that may develop into legal proceedings, other than
the matters outlined above.
On 22 December 2010, ASIC lodged legal proceedings against parties
including BOQ, arising out of the collapse of Storm Financial, which is in
liquidation. BOQ is vigorously defending this action. The proceedings are
regulatory in nature and no damages have been claimed. Certain parties
have brought civil claims against BOQ in relation to BOQ’s conduct in
making home equity loans to clients of Storm Financial. There are risks
associated with these matters, the financial outcomes of which cannot be
ascertained at this time. Even if the financial outcomes of those matters
are not material, there are risks associated with the reputation of BOQ (see
below) or regulatory action and/or further third party civil claims if adverse
findings are made against BOQ.
For both specific matters discussed above, trials commenced in September
2012 and are continuing at the date of this Prospectus.
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BOQ CPS PROSPECTUS 2012
4.3.17 Credit ratings
The credit ratings assigned to BOQ by rating agencies are based on an
evaluation of a number of factors, including its financial strength. A credit
rating downgrade could also be driven by the occurrence of one or more of
the other risks discussed in this Prospectus or by other events. If BOQ fails
to maintain its current corporate credit ratings, this could adversely affect its
cost of funds and related margins, liquidity, competitive position and access
to capital markets.
4.3.18Changes to accounting policies may adversely
affect BOQ’s business, operations and financial
condition
The accounting policies and methods that BOQ applies are fundamental to
how it records and reports its financial position and results of operations.
Management of BOQ must exercise judgment in selecting and applying
many of these accounting policies and methods so that they not only comply
with generally accepted accounting principles but they also reflect the most
appropriate manner in which to record and report on the financial position
and results of operations. However, these accounting policies may be
applied inaccurately, resulting in a misstatement of financial position and
results of operations.
In some cases, management must select an accounting policy or method
from two or more alternatives, any of which might comply with generally
accepted accounting principles and is reasonable under the circumstances,
yet might result in reporting materially different outcomes than would have
been reported under another alternative.
4.3.19Dependence on the Australian and Queensland
economies
BOQ’s revenues and earnings are dependent on economic activity and the
level of financial services its customers require. In particular, lending is
dependent on customer and investor confidence, the state of the economy,
the residential lending market and prevailing market interest rates in
Australia and in Queensland in particular. These factors are, in turn,
impacted by both domestic and international economic and political events,
natural disasters and the general state of the global economy.
The ongoing global uncertainty due to increased sovereign risk, slowing
global demand and the threat of a return to global recession, has impacted
global economic activity. This disruption has led to high levels of uncertainty
and volatility, negatively impacting economic growth, credit growth and
consumer and business confidence. A further downturn in the Australian or
Queensland economy could adversely impact BOQ’s results of operations,
liquidity, capital resources and financial condition.
For personal use only
Geopolitical instability, such as threats of, potential for, or actual conflict,
occurring around the world may also adversely affect global financial
markets, general economic and business conditions and, in turn, BOQ’s
business, operations and financial condition.
Natural disasters such as (but not restricted to) cyclones, floods and
earthquakes, and the economic and financial market implications of such
disasters on domestic and global conditions can adversely affect BOQ’s
business, operations and financial condition.
4.3.20 Environmental risk
BOQ and its customers operate businesses and hold assets in a diverse
range of geographical locations. Any significant environmental change or
external event (including fire, storm, flood, earthquake or pandemic) in any
of these locations has the potential to disrupt business activities, impact on
BOQ’s operations, damage property and otherwise affect the value of assets
held in the affected locations and BOQ’s ability to recover amounts owing
to it. In addition, such an event could have an adverse impact on economic
activity, consumer and investor confidence, or the levels of volatility in
financial markets, which could adversely affect BOQ’s businesses, financial
performance, capital resources, financial condition and prospects.
4.3.21BOQ is exposed to risks associated with
information security, which may adversely
impact its business, operations and financial
condition
Information security means protecting information and information systems
from unauthorised access, use, disclosure, disruption, modification,
perusal, inspection, recording or destruction. By its nature, BOQ handles
a considerable amount of personal and confidential information about its
customers and its own internal operations.
BOQ employs a team of information security experts who are responsible for
the development and implementation of BOQ’s information security policies.
BOQ is conscious that threats to information security are continuously
evolving and as such BOQ conducts regular internal and external reviews to
ensure new threats are identified, evolving risks are mitigated, policies and
procedures are updated and good practice is maintained. However, there
is a risk that information may be inadvertently or inappropriately accessed
or distributed or illegally accessed or stolen. Any unauthorised use of
confidential information could potentially result in breaches of privacy laws,
regulatory sanctions, legal action and claims of compensation or erosion
to BOQ’s competitive market position, which could adversely affect BOQ’s
financial position and reputation.
4.3.22Unexpected changes to BOQ’s licence to
operate in any jurisdiction may adversely
affect its business, operations and financial
condition
4.3.23Risk of a major systemic shock to the
Australian, New Zealand or other financial
systems
There is a risk that a major systemic shock, similar to that experienced
recently in Europe, could occur that causes an adverse impact on the
Australian and New Zealand financial systems.
Recently there has been an increased focus on the potential for sovereign
debt defaults and/or significant bank failures in the 17 countries comprising
the Eurozone. There can be no assurance that the market disruptions in
the Eurozone, including the increased cost of funding for certain Eurozone
governments, will not spread, nor can there be any assurance that future
assistance packages will be available or sufficiently robust to address any
further market contagion in the Eurozone or elsewhere.
Any such market and economic disruptions could have an adverse effect
on financial institutions such as BOQ because consumer and business
confidence may decrease, unemployment may rise and demand for the
products and services BOQ provides may decline, thereby reducing BOQ’s
earnings. These conditions may also affect the ability of its borrowers
to repay their loans, or BOQ’s counterparties to meet their obligations,
causing it to incur higher credit losses. These events could also result in
the undermining of confidence in the financial system, reducing liquidity
and impairing BOQ’s access to funding and impairing its customers and
counterparties and their businesses.
The nature and consequences of any such event are difficult to predict and
there can be no guarantee that BOQ could respond effectively to any such
event. If BOQ were not to respond effectively, BOQ’s businesses, financial
performance, financial condition and prospects could be adversely affected.
4.3.24BOQ may experience challenges in managing
its capital base, which could give rise to
greater volatility in capital ratios
BOQ’s capital base is critical to the management of its businesses and
access to funding. BOQ is required by APRA to maintain adequate
regulatory capital.
Under current regulatory requirements, risk-weighted assets and expected
loan losses increase as a counterparty’s risk grade worsens. These additional
regulatory capital requirements compound any reduction in capital resulting
from increased provisions for loan losses and lower profits in times of
stress. As a result, greater volatility in capital ratios may arise and may
require BOQ to raise additional capital. There can be no certainty that
any additional capital required would be available or could be raised on
reasonable terms.
Global and domestic regulators have released proposals, including the Basel
III proposals, to strengthen, among other things, the liquidity and capital
requirements of banks, funds management entities, and insurance entities.
BOQ is licensed to operate in the various states and territories in which it
operates. Unexpected changes in the conditions of the licences to operate
by governments, administrations or regulatory agencies which prohibit or
restrict BOQ from trading in a manner that was previously permitted may
adversely impact BOQ’s financial results.
BOQ CPS PROSPECTUS 2012
64
4. INVESTMENT RISKS
4.3.25Absence of government-sponsored financial
stabilisation
For personal use only
In response to the global financial crisis (GFC), a number of governmentsponsored financial stabilisation packages (including guarantees of certain
bank obligations) were introduced around the world, including in Australia.
International capital markets and liquidity conditions improved following
the GFC and banks were able to raise non-government guaranteed funds.
Many such government-sponsored financial stabilisation packages were
withdrawn or phased out, including in relation to wholesale funding. There is
no certainty that financial conditions will improve or remain stable, nor that
government-sponsored financial stabilisation packages would be
re-introduced if conditions deteriorated.
The absence of government-sponsored financial stabilisation schemes may
result in stress on the global financial system or regional financial systems,
which could adversely impact BOQ and its customers and counterparties.
Specifically, it could adversely affect BOQ’s ability to access sources of
funding and lead to a decrease in BOQ’s liquidity position and an increase
in its funding costs, negatively affecting BOQ’s business, operations and
financial condition.
4.4 General risks
4.4.1 Changes in economic conditions
The financial performance of BOQ could be affected by changes in economic
conditions in Queensland, Australia and overseas. Such changes include:
(a)changes in economic growth, unemployment levels and consumer
confidence which may lead to a general fall in the demand for BOQ’s
products and services;
(b)changes in underlying cost structures for labour and service
charges;
(c)changes in fiscal and monetary policy, including inflation and
interest rates, which may impact the profitability of BOQ or a general
fall in the demand for BOQ’s products and services;
(d)declines in aggregate investment and economic output in
Queensland, Australia or in key offshore regions;
(e)national or international political and economic instability or the
instability of national or international financial markets including as
a result of terrorist acts or war; and
(f)changes in asset values, particularly commercial and residential real
estate.
65
BOQ CPS PROSPECTUS 2012
The dislocation in credit and capital markets over the last 3 to 4 years has
significantly impacted global economic activity including the Australian
economy, with domestic and global economies slowing or in a recession
and experiencing rising unemployment. This has led to a decrease in credit
growth and the reduction in consumer and business confidence which in
turn has impacted values of commercial and residential real estate. The
Queensland and Australian economies have performed well in some industry
sectors, such as resources and resource related industries and services,
but has slowed in other sectors such as some retail sectors and financial
services. A further downturn in sectors of the Queensland or Australian
economy or in the Queensland or Australian economy generally or slowing
of the stronger sectors of the economy may lead to a lower demand for
BOQ’s products and services, or adversely affect the performance of BOQ’s
asset portfolio, and therefore could further adversely impact BOQ’s financial
performance and position.
Although BOQ will have in place a number of strategies to minimise the
exposure to economic risk and will engage in prudent management practices
to minimise its exposure to risk in the future, such factors may nonetheless
have an adverse impact on BOQ’s financial performance and position.
4.4.2 Share price risk
There are general risks associated with an investment in the share
market. Broader market factors affecting the price of CPS or Ordinary
Shares are unpredictable and may be unrelated or disproportionate to the
financial or operating performance of BOQ. Such factors may include the
economic conditions in Australia and overseas, investor sentiment in the
local and international stock markets, consumer sentiment, changes in
fiscal, monetary, regulatory and other government policies, national and
international political and economic instability or the instability of national
and international financial markets, interest and inflation rates and foreign
exchange rates. Recent turmoil in global credit markets has negatively
affected economies across the globe and led to increased volatility in stock
markets, including ASX.
For personal use only
5
ABOUT the
reinvestment
offer
BOQ CPS PROSPECTUS 2012
66
5. ABOUT THE REINVESTMENT OFFER
For personal use only
This Section provides information on BOQ’s invitation to Eligible PEPS
Holders to reinvest their PEPS in CPS and the options available to PEPS
Holders. It is important that you read this Prospectus in full before deciding
to participate in the Reinvestment Offer and invest in the CPS.
5.1Overview
5.1.1What are PEPS?
PEPS are perpetual equity preference shares issued by BOQ in 2007 that
trade on ASX under code “BOQPC”.
5.1.2Are PEPS being redeemed?
BOQ will not redeem PEPS on the first optional call date of 17 December
2012 under their terms of issue.
5.1.3What is the Reinvestment Offer?
Eligible PEPS Holders have the opportunity to reinvest their PEPS in CPS.
Eligible PEPS Holders are invited to offer some or all of their PEPS
registered at 7:00pm (Sydney time) on 9 November 2012 (PEPS Record
Date) for sale to BOQ through a selective buy-back on 24 December
2012 and have the buy-back proceeds (i.e. $100 per PEPS) automatically
reinvested in CPS.
Eligible PEPS Holders will not be required to make a separate Application
Payment to the extent that PEPS will be reinvested directly in CPS. However,
if more CPS than the number of PEPS registered in your name on the PEPS
Record Date are applied for, then an Application Payment in respect of the
additional CPS applied for will be necessary. By applying for CPS under
the Reinvestment Offer or, where applicable, electing to reinvest PEPS in the
Broker Firm Offer you irrevocably authorise BOQ to apply the proceeds of
the buy-back of your PEPS in paying the Application Payment for the CPS
into which the PEPS are being reinvested. You will not be entitled to receive
payment on any Reinvested PEPS except in this way, and so will not receive
any cash payment in respect of the buy-back of those Reinvested PEPS.
Eligible PEPS Holders will receive a paper copy of this Prospectus with a
personalised Application Form.
Eligible PEPS Holders have a number of other options, in addition to
reinvesting PEPS in CPS, which are set out in further detail in Section 5.2.1.
67
BOQ CPS PROSPECTUS 2012
5.1.4Am I eligible to participate in the Reinvestment
Offer?
To participate in the Reinvestment Offer, you must have been a registered
holder of PEPS on the PEPS Record Date and shown on the PEPS register as
having an address in Australia or New Zealand, and must not be in the US or
be acting as a nominee for a person in the US.
If you are an Eligible PEPS Holder and elect for any PEPS to be reinvested
in CPS, a holding lock will be placed on those Reinvested PEPS preventing
you from dealing with those Reinvested PEPS until the Issue Date of CPS.
You must hold your Reinvested PEPS on the Reinvested PEPS Buy-back
Date of 24 December 2012.
5.2What are the options available to PEPS
Holders?
This Section sets out the options available to Eligible PEPS Holders and
those PEPS Holders who are not eligible to receive the Reinvestment Offer.
5.2.1What are the options available to Eligible PEPS Holders?
What should Eligible PEPS Holders do?
Option 1 – apply under
the Reinvestment Offer, or
where applicable, under
the Broker Firm Offer for
your PEPS to be reinvested
in CPS
ıı
Eligible PEPS Holders will be guaranteed an Allocation of one CPS for every PEPS reinvested. However, an
Eligible PEPS Holder’s Application for additional CPS may be scaled back if there is excess demand.
ıı
Unless Eligible PEPS Holders apply for more CPS than the number of PEPS held on the PEPS Record Date,
Eligible PEPS Holders will not be required to make a separate Application Payment as the proceeds of the buyback of your PEPS will be reinvested directly into CPS (see Section 5.1.3).
ıı
Once you have submitted an Application Form to reinvest your PEPS, a holding lock will be placed on those
Reinvested PEPS preventing you from dealing with those Reinvested PEPS until the Issue Date for the Offer. The
holding lock will be released from those PEPS not successfully reinvested into CPS as soon as practicable after
the Issue Date for the Offer.
ıı
For further instructions on how to apply see Section 6.4.
For personal use only
Option
Option A. Full reinvestment
ıı
Eligible PEPS Holders may apply to reinvest all of the PEPS registered in their name on the PEPS Record Date
in CPS.
ıı
To choose this option, Eligible PEPS Holders must indicate “full reinvestment” on the personalised
Application Form.
ıı
If, on the Reinvested PEPS Buy-back Date, an Eligible PEPS Holder holds a greater or lesser number of PEPS
than shown on the personalised Application Form, and the Eligible PEPS Holder selects the full reinvestment
option, you will be taken to have applied for reinvestment of the lower of the number of PEPS specified on the
personalised Application Form and the number of PEPS registered on the Reinvested PEPS Buy-back Date.
Option B. Apply for additional CPS
ıı
Eligible PEPS Holders who elect full reinvestment may also apply for more CPS than the number of PEPS held on
the PEPS Record Date.
ıı
To choose this option, Eligible PEPS Holders must reinvest all of the PEPS held on the PEPS Record Date and
specify the number of additional CPS they wish to apply for on the personalised paper Application Form. Eligible
PEPS Holders will receive a priority allocation of CPS applied for, over Shareholder Applicants and General
Applicants, if there is excess demand for CPS. However, an Eligible PEPS Holder’s Application for additional CPS
may be scaled back if there is excess demand – see Section 5.3 for further details.
Eligible PEPS Holders are required to submit an Application Payment for the additional CPS applied for – see
Section 6.4.3 for further details.
Option C. Partial reinvestment
ıı
Eligible PEPS Holders may apply to have only some of those PEPS registered on the PEPS Record Date reinvested
in CPS.
ıı
To choose this option, Eligible PEPS Holders must specify the number of PEPS to be reinvested on the
personalised Application Form (subject to the minimum requirement of 50 PEPS in certain circumstances - see
Section 5.11.1). If you do not indicate the number of PEPS to be reinvested you will be taken to have elected to
reinvest all of your PEPS.
ıı
If, on the Reinvested PEPS Buy-back Date, an Eligible PEPS Holder holds a greater or lesser number of PEPS than
shown on the personalised Application Form, you will be taken to have applied for reinvestment of the lower of
the number of PEPS specified on the personalised Application Form and the number of PEPS registered on the
Reinvested PEPS Buy-back Date.
BOQ CPS PROSPECTUS 2012
68
5. ABOUT THE REINVESTMENT OFFER
For personal use only
Option 2 – apply under the
Broker Firm Offer to reinvest
your PEPS in CPS
Option 3 – take no action
Option 4 – sell your PEPS on
market
ıı
If you are an Eligible PEPS Holder and are an Australian or New Zealand resident retail or high net worth client of a
Syndicate Broker, you may apply to reinvest your PEPS under the Broker Firm Offer.
ıı
You may apply to reinvest all or some of the PEPS registered in your name on the PEPS Record Date in CPS.
You may also choose to apply for more CPS if you choose to reinvest all of your PEPS. If making a partial
reinvestment, a minimum requirement of 50 PEPS will apply in certain circumstances - see Section 5.11.1.
ıı
Eligible PEPS Holders will not be required to make a separate Application Payment unless more CPS than the
number of PEPS registered on the PEPS Record Date are applied for.
ıı
Eligible PEPS Holders should contact your Syndicate Broker for instructions on how to submit an Application
Form and, if applicable, an Application Payment.
ıı
Eligible PEPS Holders are not required to participate in the Reinvestment Offer and as such are not required to take
any action.
ıı
If you choose to take no action, you will continue to hold PEPS and BOQ will not redeem those PEPS on their
first optional call date of 17 December 2012. You will not receive the Pro-Rata Dividend if you choose to take
no action.
ıı
Refer to Section 5.8 for some risks associated with not participating in the Reinvestment Offer.
ıı
You may choose to sell your PEPS on market through your broker at the prevailing market price.
ıı
Under this option, you may have to pay brokerage and may receive a price greater or less than the face value of
$100 per PEPS.
ıı
If you choose this option, you will no longer be entitled to receive PEPS dividends on the PEPS you sell and
you will not receive the Pro-Rata Dividend. In respect of the PEPS you sell, you have the option to use the sale
proceeds to subscribe for CPS or you can choose not to.
5.2.2What are the options available to PEPS Holders
who are ineligible to participate in the Offer?
5.4If I elect to participate in the Reinvestment
Offer, what dividends will I receive?
PEPS Holders who have a registered address outside Australia or New
Zealand (or other eligible jurisdictions) or do not hold PEPS on the PEPS
Record Date are ineligible to participate in the Reinvestment Offer. In these
circumstances, PEPS Holders are limited to the following options:
If you are an Eligible PEPS Holder and elect for any PEPS to be reinvested
in CPS, you will receive a Pro-Rata Dividend on the Reinvested PEPS,
calculated up to but not including the Reinvested PEPS Buy-back Date. The
PEPS terms of issue will be amended by the Board of BOQ to facilitate this.
ıı
sell PEPS on market through your broker at the prevailing market
price; or
ıı
take no action and continue to hold PEPS.
The amount of Pro-Rata Dividend will be $0.689 per $100 (being the
70 days dividend accrued at 3.5910% per annum from and including
15 October 2012 up to and including 23 December 2012 and calculated
in accordance with the PEPS terms).
5.3Will I receive a priority allocation of CPS
under the Reinvestment Offer?
If you are an Eligible PEPS Holder and you apply under the Reinvestment
Offer, you are guaranteed an Allocation of one CPS for every
Reinvested PEPS.
If an Eligible PEPS Holder applies for additional CPS, any Allocation of
additional CPS may be scaled back if there is excess demand.
69
BOQ CPS PROSPECTUS 2012
You will not receive a Pro-Rata Dividend on any PEPS that you do not
reinvest in CPS. The next franked dividend of $1.791 on PEPS you retain is
expected to be paid on 15 April 2013, in accordance with the PEPS terms.
5.4.1Can I elect to reinvest the Pro-Rata Dividend in
CPS?
No. The Pro-Rata Dividend will be paid to Eligible PEPS Holders in respect
of their Reinvested PEPS via direct credit or cheque on the Reinvested PEPS
Buy-back Date, in accordance with your existing PEPS payment instructions.
5.5What are the key differences between CPS and PEPS?
For personal use only
A comparison of the key features of CPS and PEPS is set out in summary form below. These comparisons are not intended to be exhaustive.
CPS
PEPS
Legal form
Preference share
Preference share
Term
Perpetual, no maturity date but subject to Mandatory
Conversion
Perpetual, no maturity date
Issuer
BOQ
BOQ
Issue Date
24 December 2012
17 December 2007
Face Value
$100 per CPS
$100 per PEPS
Amount to be issued/
currently on issue
$250 million with the ability to raise more or less
$200 million
Quotation on ASX
Yes – expected to trade under “BOQPD”
Yes – “BOQPC”
Nature of dividends
Semi-annual, preferred, discretionary, non-cumulative,
subject to Dividend Payment Tests
Semi-annual, preferred, discretionary, non-cumulative,
subject to certain payment tests
Dividend rate
Floating rate
Floating rate
Reference rate
180 day BBSW
180 day BBSW
Margin rate
5.10% p.a. as determined by the Bookbuild
2.00% p.a.
Expected to be fully franked
Yes
Yes
Rights if Dividend is not
fully franked
Gross up
Gross up
Dividend payment tests
ıı
The Directors’ discretion
ıı
The Directors’ discretion
ıı
BOQ being lawfully able to pay under the
Corporations Act
ıı
BOQ being lawfully able to pay under the
Corporations Act
ıı
The payment not resulting in noncompliance with
APRA’s capital adequacy standards (unless APRA
consents)
ıı
The dividend not exceeding distributable profits
(unless APRA consents)
ıı
ıı
No APRA objection
The payment not resulting in noncompliance with
APRA’s capital adequacy standards (unless APRA
consents)
ıı
APRA prior written approval
Dividend restriction if
scheduled dividends not
paid
BOQ must, unless approved by special resolution of
CPS Holders, not resolve to pay or pay a dividend or
distribution on Ordinary Shares or buy-back or reduce
the capital on Ordinary Shares until and including the
next Dividend Payment Date, unless the scheduled CPS
dividend is paid in full within three Business Days.
BOQ must, unless approved by special resolution of
PEPS Holders, not resolve to pay, or pay, a dividend or
distribution on Ordinary Shares (or securities ranking
equally or junior to PEPS) or buy-back or reduce the
capital on Ordinary Shares (or securities ranking equally
or junior to PEPS) until two consecutive semi-annual
dividends have been paid on PEPS or an optional
dividend has been paid to PEPS Holders equal to the
unpaid amount or all the PEPS have been redeemed or
converted, unless the scheduled PEPS dividend is paid in
full within three business days.
The restriction does not prevent dividends being paid
pro-rata on PEPS and equal ranking securities.
BOQ CPS PROSPECTUS 2012
70
5. ABOUT THE REINVESTMENT OFFER
For personal use only
Mandatory conversion or
redemption
Optional conversion or
redemption
71
CPS
PEPS
CPS will Mandatorily Convert on:
On the occurrence of a change of control event, BOQ must
redeem the PEPS for cash, subject to APRA’s prior written
approval.
ıı
15 April 2020 or a Dividend Payment Date after that
date on which date the Conversion Conditions are
satisfied;
ıı
The occurrence of a Capital Trigger Event;
ıı
The occurrence of a Non-Viability Trigger Event; or
ıı
The occurrence of an Acquisition Event.
If APRA does not provide approval for redemption on
the occurrence of a change of control event, PEPS will
convert to Ordinary Shares on the occurrence of a change
of control event (subject to APRA’s prior written approval).
CPS may be Converted (subject to Conversion Conditions
being satisfied), Redeemed or Transferred at BOQ’s
election, following:
PEPS may be redeemed at BOQ’s election following:
ıı
A tax event;
ıı
A Tax Event;
ıı
A regulatory event; or
ıı
A Regulatory Event; or
ıı
ıı
On the Optional Conversion/Redemption Date of 15
April 2018.
The fifth anniversary of the issue date (17 December
2012) and on each subsequent dividend payment
date.
CPS may be Converted (subject to Conversion Conditions
being satisfied), at BOQ’s election, following a Potential
Acquisition Event.
PEPS Holders have no right to require redemption or
conversion.
CPS Holders have no right to require Redemption,
Conversion or Transfer.
Conversion discount
1.00%
2.50%
Capital Trigger Event
Yes. This is a new feature required by APRA – see
Section 2.6
None
Non-Viability Trigger Event
Yes. This is a new feature required by APRA – see
Section 2.7
None
Ranking in a winding up
Rank ahead of Ordinary Shares, equally with PEPS and
any other equal ranking instruments, but behind all
senior ranking securities or instruments, and behind all
depositors and other creditors.
Rank ahead of Ordinary Shares, equally with CPS and any
other equal ranking instruments, but behind all senior
ranking securities or instruments, and all depositors and
other creditors.
Return in a winding up may be adversely affected on
account of a Capital Trigger Event or a Non-Viability
Trigger Event.
Voting rights
No right to vote at general meetings of holders of Ordinary
Shares, except in limited circumstances.
No right to vote at general meetings of holders of Ordinary
Shares, except in limited circumstances.
Regulatory Treatment
ıı
Current APRA Prudential Standards: Non-Innovative
Residual Tier 1
ıı
Current APRA Prudential Standards: Non-Innovative
Residual Tier 1
ıı
Basel III Prudential Standards: Additional Tier 1
ıı
Basel III Prudential Standards: Additional Tier 1 with
transitional arrangements
BOQ CPS PROSPECTUS 2012
5.9Shareholder approval and conditional
agreement
PEPS will not fully count as Tier 1 Capital from 1 January 2013.
The Offer, including the Reinvestment Offer and the buy-back of PEPS, is
conditional on necessary shareholder approval of the buy-back being passed
at the BOQ AGM on 13 December 2012 as well as the other approvals
required to issue the CPS and approve the CPS terms (see Section 2.11.7).
No agreement will be made to buy-back PEPS unless or until all of these
shareholder approvals have been obtained and offers to sell PEPS by PEPS
Holders applying under the Reinvestment Offer are accepted by BOQ on the
Reinvested PEPS Buy-back Date.
For personal use only
5.6What is the purpose of the Reinvestment
Offer?
BOQ will not redeem the PEPS on their first optional call date of 17
December 2012. APRA has approved transitional treatment of the PEPS
under the new Basel III Prudential Standards, which will result in a gradual
reduction in the amount of PEPS that can be counted toward Tier 1 Capital
over time.
The Board has determined to offer Eligible PEPS Holders the ability to
exchange their PEPS for CPS.
5.7What are the risks associated with
participating in the Reinvestment Offer?
If you are an Eligible PEPS Holder and you apply under the Reinvestment
Offer, you may receive an Allocation of CPS. As such, you will be subject
to the risks associated with an investment in CPS and in BOQ, many of
which are outside the control of BOQ and its Directors. These risks are
outlined in Section 4 and should be considered before you apply under the
Reinvestment Offer.
5.8What are the risks associated with not fully
participating in the Reinvestment Offer?
If you are an Eligible PEPS Holder and you do not reinvest in full under
the Reinvestment Offer, you will continue to hold PEPS, or the balance of
your PEPS which are not reinvested. BOQ will not redeem PEPS on their
first optional call date of 17 December 2012. The risks associated with this
option are that:
ıı
ıı
there is no guarantee BOQ will redeem PEPS at a future date and PEPS
Holders will have no right to require BOQ to redeem PEPS, as any
election to redeem is at the sole discretion of BOQ and is subject to
APRA’s prior written approval;
following the Reinvestment Offer, it is anticipated that the number of
PEPS on issue will decline as a result of the buy-back of PEPS. This
may lead to a less liquid market for the PEPS that remain outstanding,
which could negatively impact the ability for remaining PEPS Holders
to sell their PEPS on-market at an acceptable price, or at all;
ıı
if you hold both CPS and PEPS, you will hold two securities with
different issue terms and different risk profiles; and
ıı
if there is an insufficient number and spread of PEPS Holders after
completion of the Reinvestment Offer, ASX has discretion to remove
PEPS from official quotation.
5.10What happens if the Offer does not proceed?
If you have elected to reinvest some or all of your PEPS in CPS and the
Offer does not proceed, your PEPS will not be bought back and you will
continue to hold PEPS. Any Application Payment in respect of additional
CPS will be refunded to you. No interest will be payable on any Application
Payment submitted.
5.11Further information about PEPS and
participating in the Reinvestment Offer
5.11.1
Do you need to apply for a minimum number
of CPS?
There is no minimum number of PEPS that you must hold to be able to
participate in the Reinvestment Offer.
If you are an Eligible PEPS Holder and own 50 PEPS or fewer, you must
apply to reinvest all your PEPS in CPS if you wish to participate in the
Reinvestment Offer.
If you are an Eligible PEPS Holder and own more than 50 PEPS, you must
apply for a minimum number of 50 CPS ($5,000).
5.11.2What do you do if you have sold some of your
PEPS but wish to apply for CPS?
If you hold fewer PEPS than set out on your personalised Application Form,
you may still reinvest in CPS the remaining PEPS registered in your name
on the Reinvested PEPS Buy-back Date.
If you wish to apply for more CPS than the number of PEPS registered
in your name on the PEPS Record Date, you will need to make a full
reinvestment and a separate Application Payment for additional CPS
applied for.
You may also apply for partial reinvestment in the manner outlined in
Section 5.2.1.
BOQ CPS PROSPECTUS 2012
72
5. ABOUT THE REINVESTMENT OFFER
5.11.5Can you change your PEPS payment
instructions?
If you apply to have your PEPS reinvested in CPS, it is your responsibility to
ensure that you do not sell or dispose of any of those PEPS that you wish to
reinvest, other than as part of the Reinvestment Offer.
If you elect to reinvest some or all of your PEPS in CPS and you wish
to change your PEPS payment instructions for the payment of the ProRata Dividend on your Reinvested PEPS you must provide updated
instructions to the Registry by the Closing Date for the Reinvestment Offer of
13 December 2012.
For personal use only
5.11.3Can you sell your PEPS after you have
completed and returned your Application Form?
PEPS Holders are taken to agree to a holding lock being placed on those
PEPS, pending completion of the Reinvestment – but it is your obligation to
ensure that you do not transfer those PEPS. If you do, the number of CPS
you may be allocated will be reduced to the extent the required number of
PEPS are not available on the Reinvested PEPS Buy-back Date.
Once you have submitted an Application Form to reinvest your PEPS, a
holding lock will be placed on those Reinvested PEPS preventing you from
dealing with those Reinvested PEPS until the Issue Date for the Offer.
The holding lock will be released from those PEPS not successfully
reinvested into CPS as soon as practicable after the Issue Date for the Offer.
5.11.4What are the tax implications of having your
PEPS bought back?
A general outline of the taxation implications for certain investors who
are Australian residents for tax purposes investing in the Offer can be
found in the Australian taxation summary in Section 7, including the CGT
implications for Eligible PEPS Holders of the buy-back of PEPS under the
Reinvestment Offer.
Selling your PEPS into the Reinvestment Offer may lead to a capital gain
or loss or be neutral for CGT purposes depending on the cost base of your
PEPS and your personal tax circumstances.
73
BOQ CPS PROSPECTUS 2012
5.11.6Is brokerage or stamp duty payable?
No brokerage or stamp duty is payable on the buy-back of your PEPS or
your Application for CPS.
PEPS Holders who choose to sell their PEPS on market through their broker
may be required to pay applicable brokerage.
For personal use only
ABOUT THE
OFFER
6
BOQ CPS PROSPECTUS 2012
74
6. ABOUT THE OFFER
6.1 The Offer
For personal use only
The Offer is for the issue of CPS with a Face Value of $100 each to raise
approximately $250 million with the ability to raise more or less.
All CPS issued will be allotted under and subject to the disclosures made in
this Prospectus.
6.2Structure of the Offer
The Offer comprises:
ıı
an Institutional Offer made to certain Institutional Investors;
ıı
a Broker Firm Offer made to Australian and New Zealand resident retail
and high net worth clients of Syndicate Brokers and, where applicable,
Eligible PEPS Holders;
Eligible PEPS Holders and Eligible Shareholders will also have access to
download an electronic version of this Prospectus as well as be able to
download a personalised Application Form through www.boq.com.au.
The Corporations Act prohibits any person from passing the Application
Form on to another person unless it is attached to, or accompanied by, a
printed copy of this Prospectus or the complete and unaltered electronic
version of this Prospectus.
Applications will only be considered where Applicants have applied pursuant
to an Application Form (either electronic or paper) that was attached to,
or accompanied by, a copy of this Prospectus, and have provided an
Application Payment, unless the Application is under the Reinvestment Offer
in which case no Application Payment is required.
6.3.1 Electronic access to this Prospectus
ıı
a Reinvestment Offer made to Eligible PEPS Holders;
The following conditions apply if this Prospectus is accessed electronically:
ıı
a Shareholder Offer made to Eligible Shareholders; and
ıı
you must access and download the entire Prospectus;
ıı
a General Offer made to members of the general public who are
resident in Australia or New Zealand.
ıı
your Application will only be considered where you have applied on
an Application Form (either electronic or paper) that was attached to or
accompanied by a copy of the Prospectus. By making an Application,
you declare that you were given access to the complete Prospectus
together with the Application Form; and
ıı
the Prospectus is available electronically to you only if you are
accessing and downloading or printing the electronic copy of the
Prospectus in Australia or New Zealand or if you are an Eligible
Shareholder.
6.3Obtaining a Prospectus and Application Form
During the Offer Period, an electronic version of this Prospectus with
an Application Form are available through www.boq.com.au and may be
available through your Syndicate Broker. You can also request a free paper
copy of this Prospectus and an Application Form by calling the BOQ Offer
Information Line on 1800 779 639 (within Australia) or +61 2 8280 7626
(outside Australia) Monday to Friday – 8:30am to 7:30pm (Sydney time) or
by registering online to receive a Prospectus at www.boq.com.au.
Institutional
Offer
75
6.4 Applying for CPS
6.4.1Overview
For all Offers (Institutional Offer, Broker Firm Offer, Reinvestment Offer,
Shareholder Offer and General Offer), Applications must be for a minimum of
50 CPS ($5,000) and after that in multiples of 10 CPS ($1,000).
Who can apply?
Institutional Investor
ıı
i.e. an investor who is
invited by the Joint Lead
Managers to bid for
CPS in the Bookbuild
and who is applying
through the Institutional
Offer (provided that such
investor may not be in the
United States or any other
ineligible jurisdiction).
BOQ CPS PROSPECTUS 2012
When to apply
ıı
The Bookbuild was
conducted on 16
November 2012.
How to apply online
ıı
Application and
settlement procedures for
Institutional Investors will
be advised by the Joint
Lead Managers.
How to apply using
a paper Application
Form
ıı
Application and
settlement procedures
for Institutional
Investors will be advised
by the Joint Lead
Managers.
For personal use only
Broker Firm
Offer
Who can apply?
Broker Firm Applicant
ıı
ıı
i.e. an Australian or New
Zealand resident retail or
high net worth client of a
Syndicate Broker invited
to participate through the
Broker Firm Offer; and
Eligible PEPS Holders
electing to reinvest in CPS
and invited to participate
through the Broker Firm
Offer.
When to apply
ıı
Applications will only be
accepted during the Offer
Period, which opens on
19 November 2012.
ıı
The Closing Date for the
Broker Firm Offer in relation
to Reinvested PEPS is
5:00pm (Sydney time) on
13 December 2012.
ıı
ıı
ıı
The Closing Date for
the Broker Firm Offer
(excluding Applications in
respect of Reinvested PEPS)
is 5:00pm (Sydney time) on
18 December 2012.
Your completed Application
Form and Application
Payment (if any) must be
received by your Syndicate
Broker in accordance
with arrangements made
between you and your
Syndicate Broker.
How to apply using
a paper Application
Form
How to apply online
ıı
If you are a Broker Firm
Applicant you may NOT
apply online.
ıı
Contact your Syndicate
Broker for instructions.
ıı
There are paper
Application Forms in the
back of this Prospectus
that may be used by
Broker Firm Applicants
(excluding Applications
in respect of Reinvested
PEPS).
ıı
General instructions on
how to complete the paper
Application Form are set
out on the Application
Form.
ıı
You must contact your
Syndicate Broker for their
specific instructions on
how to submit the paper
Application Form and
your Application Payment
(if any) to your
Syndicate Broker.
ıı
You must not return your
paper Application Form to
the Registry.
ıı
Your Syndicate Broker
must have received
your completed paper
Application Form and
Application Payment
(as applicable) in time
to arrange settlement
on your behalf by the
relevant Closing Date
for the Broker Firm Offer
in respect of Reinvested
PEPS being 13 December
2012 or Closing Date
for the Broker Firm Offer
(excluding Applications
in respect of Reinvested
PEPS) being 18 December
2012.
ıı
Your Syndicate Broker
will act as your agent
in processing your
paper Application Form
and providing your
Application details and
Application Payment
to BOQ.
If you are a client of a
Syndicate Broker, you must
contact your broker directly
for instructions as to how
to participate in the Broker
Firm Offer.
BOQ CPS PROSPECTUS 2012
76
For personal use only
6. ABOUT THE OFFER
Reinvestment
Offer
77
Who can apply?
Reinvestment Applicant
ıı
i.e. an Eligible PEPS
Holder who is applying
through the Reinvestment
Offer.
BOQ CPS PROSPECTUS 2012
When to apply
ıı
Applications will only be
accepted during the Offer
Period, which opens on
19 November 2012.
ıı
The Closing Date for
the Reinvestment Offer,
including Applications for
Reinvested PEPS under
the Broker Firm Offer is
5:00pm (Sydney time) on
13 December 2012.
ıı
Your completed
personalised paper
Application Form or
online Application Form
and Application Payment
(if applicable) must be
received by the Registry
by the Closing Date and
time.
ıı
The options available to
Eligible PEPS Holders
under the Reinvestment
Offer are outlined in
Section 5.
How to apply online
ıı
ıı
Ability to apply online
is available to issuer
sponsored Eligible PEPS
Holders who wish to
reinvest their PEPS or
apply for additional CPS
using BPAY®. Please
go to www.boq.com.au
and follow instructions to
apply online.
How to apply using
a paper Application
Form
ıı
Follow the instructions
to complete the
personalised Application
Form which will be
mailed to you with a
copy of this Prospectus
on or around 20
November 2012.
ıı
You can also request
a paper copy of the
Prospectus and your
personalised Application
Form by calling the BOQ
Offer Information Line
on 1800 779 639
(within Australia) or
+61 2 8280 7626
(outside Australia)
(Monday to Friday
8:30am to 7:30pm
Sydney time).
ıı
If applicable, you will
be required to pay your
Application Payment by
13 December 2012 by
cheque(s) and/or money
order(s).
ıı
You will be required to
post your completed
personalised Application
Form to the address
printed on your reply
paid envelope so that
it reaches that address
by the Closing Date and
time.
CHESS sponsored
Eligible PEPS Holders
should seek instructions
from their broker or
controlling participant as
to how to apply.
For personal use only
Shareholder
Offer
Who can apply?
Shareholder Applicant
ıı
i.e. an Eligible
Shareholder who is
applying through the
Shareholder Offer.
When to apply
How to apply online
ıı
Applications will only be
accepted during the Offer
Period, which opens on
19 November 2012.
ıı
Eligible Shareholders that
are not also Eligible PEPS
Holders will have the
ability to apply online.
ıı
The Closing Date for
the Shareholder Offer is
5:00pm (Sydney time) on
13 December 2012.
ıı
Please go to www.boq.
com.au and follow the
instructions to apply
online.
ıı
Your completed
personalised paper
Application Form or
online Application Form
and Application Payment
must be received by the
Registry by the Closing
Date and time.
ıı
When applying online,
you will be required to pay
for CPS using BPAY®.
ıı
Eligible Shareholders
that are also Eligible
PEPS Holders wishing
to participate in the
Reinvestment Offer should
refer to the instructions
on how to apply under the
Reinvestment Offer.
ıı
If you pay by BPAY®
using the details on your
personalised Application
Form or if you apply
online, you will not
be required to return
a personalised paper
Application Form.
How to apply using
a paper Application
Form
ıı
Eligible Shareholders will
receive a postcard providing
details relating to the
Shareholder Offer.
ıı
You can request a paper
copy of the Prospectus
and your personalised
Application Form by calling
the BOQ Offer Information
Line on 1800 779 639
(within Australia) or
+61 2 8280 7626 (outside
Australia) (Monday to
Friday 8:30am to 7:30pm
Sydney time).
ıı
Instructions on how
to complete the paper
Application Form are set out
on the Application Form.
ıı
You will be required to pay
your Application Payment
by 13 December 2012 by
cheque(s), money order(s)
or BPAY®.
ıı
If you pay by BPAY® using
details on your personalised
paper Application Form,
you will not be required to
return a personalised paper
Application Form.
ıı
If paying by cheque or
money order, you will
be required to post your
completed personalised
Application Form and
Application Payment so that
it is received by the Closing
Date for the Shareholder
Offer which is 5:00pm
(Sydney time) on 13
December 2012.
ıı
Eligible Shareholders
that are also Eligible
PEPS Holders wishing
to participate in the
Reinvestment Offer should
refer to the instructions
on how to apply under the
Reinvestment Offer.
BOQ CPS PROSPECTUS 2012
78
For personal use only
6. ABOUT THE OFFER
General Offer
Who can apply?
General Applicant
ıı
i.e. a member of the
general public who is
resident in Australia or
New Zealand applying
through the General Offer.
When to apply
ıı
Applications will only be
accepted during the Offer
Period, which opens on
19 November 2012.
ıı
The Closing Date for
the General Offer is
5:00pm (Sydney time) on
13 December 2012.
ıı
Your completed paper
Application Form or
online Application Form
and Application Payment
must be received by the
Registry by the Closing
Date and time.
ıı
If you apply online and
pay by BPAY®, you will
not be required to return a
paper Application Form.
How to apply online
ıı
All Eligible General
Applicants will have the
ability to apply online.
ıı
Please go to www.boq.
com.au and follow the
instructions to apply
online.
ıı
How to apply using
a paper Application
Form
ıı
There are paper
Application Forms at the
back of this Prospectus
that should be used by
General Applicants.
ıı
You can request a paper
copy of the Prospectus
and paper Application
Form by calling the BOQ
Offer Information Line
on 1800 779 639
(within Australia) or
+61 2 8280 7626
(Outside Australia)
(Monday to Friday
8:30am to 7:30pm
Sydney time).
ıı
Instructions on how
to complete the paper
Application Form are set
out on the Application
Form.
ıı
If applying using the
paper Application Form,
you will be required
to pay for CPS using
cheque(s) and/or
money order(s) by 13
December 2012. If you
wish to pay by BPAY®,
you need to make an
online Application.
ıı
You will be required to
post your completed
paper Application
Form and Application
Payment so that it
reaches the Registry by
the Closing Date for the
General Offer which is
5:00pm (Sydney time)
on 13 December 2012.
When applying online,
you will be required to pay
for CPS using BPAY®.
All dates are indicative only and may change without notice. You are encouraged to apply as soon as possible after the Opening Date.
6.4.2 Delivering paper Application Forms
Unless you are applying through the Broker Firm Offer, you should return your completed paper Application Form and Application Payment (if applicable)
to one of the addresses below so that they are received by the Registry before the Closing Date and time, which is expected to be 5:00pm (Sydney time) on
13 December 2012. If you are applying through the Broker Firm Offer you should contact your Syndicate Broker for instructions.
79
BOQ CPS PROSPECTUS 2012
Shareholder Offer Applicants
For personal use only
By mail
BOQ CPS Offer
C/- Link Market Services Limited
GPO Box 3560
Sydney NSW 2001
or
By hand
BOQ CPS Offer
C/- Link Market Services Limited
Locked Bag 3415
Brisbane QLD 4001
BOQ CPS Offer
C/- Link Market Services Limited
1A Homebush Bay Drive
Rhodes NSW 2138
Broker Firm Applicants, including Eligible PEPS Holders (where applicable)
Your Application Forms and Application Payment (if applicable) should be sent to your broker or controlling participant. You must not return your paper
Application Form to the Registry. Please contact your Syndicate Broker for further instructions.
Reinvestment Offer (non-Broker Firm) and General Applicants
By mail
By hand
BOQ CPS Offer
C/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
BOQ CPS Offer
C/ – Link Market Services Limited
1A Homebush Bay Drive
Rhodes NSW 2138
Please note that paper Application Forms and Application Payments will not be accepted at any other address or office and will not be accepted at BOQ’s
registered office or any other BOQ office or branch or at other offices or branches of the Registry.
6.4.3 How to pay
How to pay online
How to pay using a paper Application
Form
Institutional Offer
ıı
N/A
ıı
N/A
Broker Firm Offer
ıı
N/A
ıı
You must contact your Syndicate Broker for
information on how to submit the paper Application
Form and your Application Payment to your
Syndicate Broker.
Reinvestment Offer application for additional
CPS
ıı
If you are an issuer sponsored Eligible PEPS
Holder and you apply for additional CPS using an
online Application Form, you must complete your
Application for additional CPS by making a BPAY®
payment.
ıı
If you apply using your personalised Application
Form, an Application Payment is only required if you
choose to apply for more CPS than the number of
PEPS registered in your name on 9 November 2012.
ıı
ıı
Once you have completed your online Application
Form, you will be given a BPAY® biller code
and unique Customer Reference Number for that
Application. Follow the BPAY® instructions below
to complete your Application.
ıı
If you do not make a BPAY® payment, your
Application will be incomplete and will not be
accepted by BOQ.
If you choose to apply for more CPS than the
number of PEPS registered in your name on 9
November 2012, your completed Application Form
must be accompanied by an Application Payment in
the form of cheque(s) and/or money order(s) drawn
on an Australian dollar account of an Australian
financial institution and made payable to Bank of
Queensland Limited.
ıı
Cheque(s) should be crossed "Not Negotiable".
Cash payments will not be accepted.
ıı
You cannot pay by BPAY®.
ıı
If your Application indicating full reinvestment is
not accompanied by an Application Payment for any
additional CPS, you will be taken to have applied for
reinvestment of that number of PEPS that you hold
on 9 November 2012.
ıı
ıı
Your completed online Application Form and
Application Payment must be received by the
Registry by the Closing Date.
CHESS sponsored Eligible PEPS Holders may NOT
apply or make payment online. Please contact your
Syndicate Broker for further instructions on how
to pay.
BOQ CPS PROSPECTUS 2012
80
For personal use only
6. ABOUT THE OFFER
Shareholder Offer
General Offer
81
BOQ CPS PROSPECTUS 2012
How to pay online
How to pay using a paper Application
Form
ıı
ıı
ıı
If you apply using an online Application Form, you
must complete your Application by making a BPAY®
payment.
Once you have completed your online Application
Form, you will be given a BPAY® biller code
and unique Customer Reference Number for that
Application. Follow the BPAY® instructions below
to complete your Application.
ıı
If you do not make a BPAY® payment, your
Application will be incomplete and will not be
accepted by BOQ.
ıı
Your completed online Application Form and
Application Payment must be received by the
Registry by the Closing Date and time.
ıı
If you apply using an online Application Form, you
must complete your Application by making a BPAY®
payment.
ıı
Once you have completed your online Application
Form, you will be given a BPAY® biller code
and unique Customer Reference Number for that
Application. Follow the BPAY® instructions below
to complete your Application.
ıı
If you do not make a BPAY® payment, your
Application will be incomplete and will not be
accepted by BOQ.
ıı
Your completed online Application Form and
Application Payment must be received by the
Registry by the Closing Date and time.
You can complete your Application by:
––
making a BPAY® payment; or
––
making payment by cheque(s) and/or money
order(s).
ıı
If you are making a BPAY® payment, you do
not need to complete or return the personalised
Application Form. Simply use the biller code and
customer reference number provided on your
personalised Application Form and follow the
BPAY® instructions. By completing a BPAY®
payment, you acknowledge you are applying
pursuant to the personalised Application Form.
ıı
If you do not wish to pay by BPAY®, your
completed personalised Application Form must be
accompanied by an Application Payment in the form
of cheque(s) and/or money order(s) drawn on an
Australian dollar account of an Australian financial
institution and made payable to ‘Bank of Queensland
Limited’.
ıı
Cheque(s) should be crossed ‘Not Negotiable’. Cash
payments will not be accepted.
ıı
You will be required to post your completed
personalised Application Form so that it reaches
the Registry prior to the Closing Date and time only
if you intend on paying by cheque(s) or money
order(s).
ıı
Your completed Application Form must be
accompanied by an Application Payment in the form
of cheque(s) and/or money order(s) drawn on an
Australian dollar account of an Australian financial
institution and made payable to ‘Bank of Queensland
Limited’.
ıı
Cheque(s) should be crossed ‘Not Negotiable’. Cash
payments will not be accepted.
ıı
You cannot pay by BPAY® if you apply using a
paper Application Form. If you wish to pay by
BPAY® you need to complete an online Application
Form.
ıı
You will be required to post your completed
Application Form and Application Payment so that
it reaches the Registry prior to the Closing Date and
time only if you intend on paying by cheque(s) or
money order(s).
6.4.7Refunds
If you apply for CPS using an online Application Form and an Application
Payment is required, you must complete your Application by making a
BPAY® payment. Applicants will not be required to return a personalised
Application Form if paying by BPAY®.
Applicants who are not allotted any CPS, or are allotted fewer CPS than the
number applied and paid for as a result of a scale back, will have all or some
of their Application Payments (as applicable) refunded (without interest) as
soon as practicable after the Issue Date.
Using the BPAY® details provided, you need to:
In the event that the Offer does not proceed for any reason, all Applicants
will have their Application Payments refunded (without interest) as soon as
practicable.
For personal use only
6.4.4 How to use BPAY®
ıı
access your participating BPAY® financial institution either through
telephone banking or internet banking;
ıı
select BPAY® and follow the prompts;
ıı
enter the biller code supplied;
ıı
enter the unique Customer Reference Number supplied for each
Application;
ıı
enter the total amount to be paid which corresponds to the number of
CPS you wish to apply for under each Application (i.e. a minimum of
$5,000 (50 CPS) and incremental multiples of $1,000 (10 CPS) after
that)
If the CPS Offer does not proceed, BOQ will notify Eligible PEPS Holders by
an ASX announcement.
Any amount of $5 or less in aggregate will not be refunded to an Applicant,
but instead paid to Children’s Hospital Foundations Australia as a
donation, within a reasonable time after the Offer Period. More information
on Children’s Hospital Foundations Australia is available at www.
childrenshospitals.org.au.
6.5 Bookbuild and allocation policy
6.5.1Bookbuild
ıı
note that your financial institution may apply limits on your use of
BPAY® and that you should make enquiry about the limits that apply in
your own personal situation;
ıı
select the account you wish your payment to be made from;
ıı
schedule your payment for the same day that you complete your
online Application Form since Applications without payment cannot be
accepted; and
The Bookbuild is a process that was conducted by the Joint Lead Managers
on 16 November 2012 to determine the Margin and firm allocations of CPS
to Bookbuild participants (being Syndicate Brokers and certain Institutional
Investors). In this process, the Bookbuild participants were invited to
lodge bids for a number of CPS. On the basis of those bids, the Joint Lead
Managers and BOQ have determined the Margin. The Joint Lead Managers,
in consultation with BOQ, have also determined the firm allocations to
Syndicate Brokers and to certain Institutional Investors.
ıı
record your BPAY® receipt number and date paid. Retain these details
for your records.
BOQ and the Joint Lead Managers may agree to increase or decrease the
size of the Offer following the close of the Bookbuild.
BPAY® payments must be made from an Australian dollar account of an
Australian financial institution. You will need to check with your financial
institution in relation to their BPAY® closing times to ensure that your
Application Payment will be received prior to the Closing Date and time.
6.4.5 Brokerage, commission and stamp duty
No brokerage, commission or stamp duty is payable on your Application.
You may have to pay brokerage, but will not have to pay any stamp duty, on
any later sale of your CPS on ASX after CPS have been quoted on ASX.
6.4.6 Application Payments held on trust
All Application Payments received before CPS are issued will be held by
BOQ on trust in an account established solely for the purposes of depositing
Application Payments received. After CPS are issued to successful
Applicants, the Application Payments held on trust will be payable to BOQ.
BOQ CPS PROSPECTUS 2012
82
6. ABOUT THE OFFER
6.5.2 What is the allocation policy?
ıı
Allocations to Institutional Investors were agreed by BOQ and the Joint Lead Managers following completion of
the Bookbuild.
Broker Firm Offer
ıı
Allocations to Syndicate Brokers were agreed by BOQ and the Joint Lead Managers following completion of
the Bookbuild.
ıı
Allocations to Broker Firm Applicants by a Syndicate Broker are at the discretion of that Syndicate Broker.
ıı
Eligible PEPS Holders who apply under the Broker Firm Offer are guaranteed an Allocation of one CPS for every
Reinvested PEPS.
ıı
Eligible PEPS Holders are taken to agree to a holding lock being placed on those PEPS applied to be reinvested,
pending completion of the Reinvestment Offer. If you transfer any PEPS, the number of CPS you may be allocated
will be reduced to the extent the required number of PEPS are not available on 24 December 2012.
ıı
If you are an Eligible PEPS Holder and you apply under the Reinvestment Offer, you are guaranteed an Allocation
of one CPS for every Reinvested PEPS.
ıı
If an Eligible PEPS Holder applies for additional CPS, any Allocation of additional CPS may be scaled back if there
is excess demand. No assurance is given that any PEPS Holder Applicant will receive an allocation of additional
CPS.
ıı
Eligible PEPS Holders are taken to agree to a holding lock being placed on those PEPS applied to be Reinvested,
pending completion of the Reinvestment. If you transfer any PEPS, the number of CPS you may be Allocated will
be reduced to the extent the required number of PEPS are not available on 24 December 2012.
ıı
Allocations for the Shareholder Offer and General Offer will be determined by BOQ and the Joint Lead Managers
after the relevant Closing Date.
ıı
BOQ and the Joint Lead Managers have absolute discretion to determine the method and extent of the Allocations.
ıı
If there is excess demand for CPS after Allocations to Reinvestment Applicants, Institutional Investors and
Syndicate Brokers, Shareholder Applicants will be given priority over General Applicants.
ıı
BOQ and the Joint Lead Managers have absolute discretion to determine the method and extent of the priority
Allocation to Shareholder Applicants.
ıı
BOQ and the Joint Lead Managers reserve the right to scale back Applications from Shareholder Applicants and
General Applicants. Any scale back will be announced on ASX on the day CPS commence trading on a deferred
settlement basis – expected to be 27 December 2012.
ıı
BOQ and the Joint Lead Managers reserve the right to:
For personal use only
Institutional Offer
Reinvestment Offer
Shareholder Offer
and General Offer
83
BOQ CPS PROSPECTUS 2012
ıı
––
Allocate to any Shareholder Applicant or General Applicant all CPS for which they have applied;
––
reject any Application by a Shareholder Applicant or General Applicant; or
––
Allocate to any Shareholder Applicant or General Applicant a lesser number of CPS than that applied for,
including less than the minimum Application of CPS, or none at all.
No assurance is given that any Shareholder Applicant or General Applicant will receive an Allocation of CPS.
6.5.3 How will the final allocation policy be announced?
ıı
Allocations to Institutional Investors have been advised to those investors under the Bookbuild.
Broker Firm Offer
ıı
Allocations to Syndicate Brokers have been advised to those brokers under the Bookbuild.
ıı
Applicants under the Broker Firm Offer will also be able to confirm their firm Allocation through the Syndicate
Broker from whom they received their allocation.
ıı
However, if you sell CPS before receiving a Holding Statement, you do so at your own risk, even if you confirmed
your firm allocation through a Syndicate Broker.
ıı
After the Issue Date, Applicants in the Reinvestment Offer will be able to call the BOQ Offer Information Line on
1800 779 639 (within Australia) or +61 2 8280 7626 (outside Australia) (Monday to Friday 8:30am to 7:30pm
Sydney time) to confirm your allocation. It is expected that this information will be advertised in The Sydney
Morning Herald, The Age, The Australian, The Australian Financial Review, The Courier Mail and The West
Australian on or about 27 December 2012.
ıı
However, if you sell CPS before receiving a Holding Statement, you do so at your own risk, even if you obtained
details of your holding from the BOQ Offer Information Line on 1800 779 639 (within Australia) or
+61 2 8280 7626 (outside Australia) (Monday to Friday 8:30am to 7:30pm Sydney time).
ıı
After the Issue Date, Applicants in the Shareholder Offer or General Offer will be able to call the BOQ Offer
Information Line on 1800 779 639 (within Australia) or +61 2 8280 7626 (outside Australia) (Monday to Friday
8:30am to 7:30pm Sydney time) to confirm your Allocation. It is expected that this information will be advertised
in The Sydney Morning Herald, The Age, The Australian, The Australian Financial Review, The Courier Mail and
The West Australian on or about 27 December 2012.
ıı
However, if you sell CPS before receiving a Holding Statement, you do so at your own risk, even if you obtained
details of your holding by calling the BOQ Offer Information Line on 1800 779 639 (within Australia) or
+61 2 8280 7626 (outside Australia) (Monday to Friday 8:30am to 7:30pm Sydney time).
For personal use only
Institutional Offer
Reinvestment
Offer
Shareholder Offer
and General Offer
6.6 Other information
6.6.1 Restrictions on distribution
No action has been taken to register or qualify this Prospectus, CPS or the
Offer or otherwise to permit a public offering of CPS in any jurisdiction
outside Australia and New Zealand.
The distribution of this Prospectus (including an electronic copy) outside
Australia may be restricted by law. If you come into possession of this
Prospectus outside Australia or New Zealand, then you should seek advice
on, and observe, any such restrictions. Any failure to comply with such
restrictions may violate securities laws. This Prospectus does not constitute
an offer or invitation in any jurisdiction in which, or to any person to whom,
it would not be lawful to make such an offer or invitation.
This Prospectus (including an electronic copy) may not be distributed or
released, in whole or in part, in the US. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, securities in the United
States. Neither the CPS nor the Ordinary Shares have been or will be
registered under the US Securities Act and may not be offered or sold in the
US except in transactions exempt from, or not subject to, registration under
the US Securities Act and applicable US state securities laws. Any offer, sale
or resale of CPS in the US by a dealer (whether or not participating in the
Offer) may violate the registration requirements of the US Securities Act.
Subject to BOQ approval, CPS may be offered in certain permitted
jurisdictions outside Australia under the Institutional Offer where such offer
is made, and accepted, in accordance with the laws of such jurisdictions
(see Section 10.6 for foreign selling restrictions).
Each person submitting an Application Form will be deemed to have
acknowledged that they are aware of the restrictions referred to in this
Section 6.6.1 and to have represented and warranted that they are able to
apply for and acquire CPS in compliance with those restrictions.
6.6.2 Application to ASX for quotation of CPS
BOQ has applied to ASX for CPS to be quoted on ASX within seven days
after the date of this Prospectus. If ASX does not grant permission for CPS
to be quoted within three months after the date of this Prospectus (or any
longer period permitted by law), CPS will not be issued and all Application
Payments will be refunded (without interest) to Applicants as soon as
practicable.
6.6.3 CHESS and issuer sponsored holdings
BOQ has applied for CPS to participate in CHESS. No certificates will be
issued for CPS. BOQ expects that Holding Statements for issuer sponsored
holders and confirmations for CHESS holders will be despatched to
successful Applicants by 28 December 2012.
BOQ CPS PROSPECTUS 2012
84
6. ABOUT THE OFFER
6.6.4Deferred settlement trading and selling CPS on
market
For personal use only
It is expected that CPS will begin trading on ASX on a deferred settlement
basis on 27 December 2012 under ASX code “BOQPD”. Trading is expected
to continue on that basis until 31 December 2012, when it is anticipated that
trading of CPS will begin on a normal settlement basis. Deferred settlement
will occur as a consequence of trading which takes place before Holding
Statements are despatched to successful Applicants.
6.7Enquiries
6.7.1Reinvestment Applicants, Shareholder
Applicants and General Applicants
You are responsible for confirming your holding before trading in CPS.
If you are a successful Applicant and sell your CPS before receiving your
Holding Statement, you do so at your own risk.
You can call the BOQ Offer Information Line on 1800 779 639 (within
Australia) or +61 2 8280 7626 (outside Australia) Monday to Friday –
8:30am to 7:30pm (Sydney time) if you:
You may call the BOQ Offer Information Line on 1800 779 639 (within
Australia) or +61 2 8280 7626 (outside Australia) (Monday to Friday 8:30am
to 7:30pm Sydney time) or your Syndicate Broker, after the Issue Date to
enquire about your allocation.
ıı
have further questions on how to apply for CPS;
ıı
require assistance to complete your Application Form;
ıı
require additional copies of this Prospectus and Application Forms; or
6.6.5Provision of bank account details for Dividends
ıı
have any other questions about the Offer.
BOQ’s current policy is that CPS Holders with a registered address in
Australia and New Zealand will be paid Dividends by direct credit into
nominated Australian or New Zealand financial institution accounts
(excluding credit card accounts) and for all other CPS Holders, payments
will be made by Australian dollar cheque.
If you are unclear in relation to any matter relating to the Offer or are
uncertain whether CPS are a suitable investment for you, you should consult
your stockbroker, solicitor, accountant or other independent and qualified
professional adviser.
6.6.6Provision of TFN or ABN for Australian tax
residents
If you are a Shareholder Applicant or a General Applicant who has not
already quoted your TFN or ABN and are issued any CPS, then you may be
contacted in relation to quoting your TFN or ABN.
The collection and quotation of TFNs and ABNs are authorised, and
their use and disclosure is strictly regulated, by tax laws and the
Privacy Act 1988 (Cth).
Successful Applicants who do not have an address in Australia registered
with the Registry, or who direct the payment of any Dividend to an
address outside of Australia, may have an amount deducted for Australian
withholding tax from any Dividend paid, to the extent that the Dividend is not
fully franked.
6.6.7 Discretion regarding the Offer
BOQ reserves the right not to proceed with, and may withdraw, the Offer at
any time before the issue of CPS to successful Applicants.
If the Offer, or any part of it, does not proceed, all relevant Application
Payments will be refunded (without interest).
BOQ and the Joint Lead Managers also reserve the right to close the Offer or
any part of it early, extend the Offer or any part of it, accept late Applications
or bids either generally or in particular cases, reject any Application or bid,
or allocate to any Applicant or bidder fewer CPS than applied or bid for. This
is at BOQ’s and the Joint Lead Managers’ discretion, and neither BOQ nor
the Joint Lead Managers are under any obligation to exercise that discretion
in any particular case.
85
Investors should also note that no cooling off rights (whether by law
or otherwise) apply to an investment in CPS. This means that, in most
circumstances, Applicants may not withdraw their Applications once
submitted.
BOQ CPS PROSPECTUS 2012
6.7.2 Broker Firm Applicants
If you have further questions about the Offer or your Application under the
Broker Firm Offer, call your Syndicate Broker.
For personal use only
AUSTRALIAN
TAXATION
SUMMARY
7
BOQ CPS PROSPECTUS 2012
86
7. AUSTRALIAN TAXATION SUMMARY
For personal use only

    
    
    
  


  
  
   
  

The Directors
Bank of Queensland Limited
259 Queen Street
Brisbane QLD 4000
Our ref
19 November 2012
Dear Directors
Bank of Queensland Convertible Preference Shares (CPS)
Australian Tax Summary
We have been requested by Bank of Queensland Limited (BOQ) to prepare an Australian tax
summary for inclusion in the Prospectus dated 19 November 2012 in relation to the Offer to
subscribe for CPS.
Our summary provides a general overview of the Australian income tax, goods and services tax
(GST) and stamp duty consequences for certain investors that acquire CPS through initial
subscription under this Prospectus (including by way of the Reinvestment Offer for Eligible
PEPS Holders).
Unless otherwise stated, capitalised terms used in this summary are as defined in this
Prospectus.
1
Scope
This summary has been prepared for inclusion in the Prospectus and should be read in
conjunction with the Prospectus. We have based our summary on the information set out
elsewhere in the Prospectus, including the CPS Terms as attached to the Prospectus.
This summary is only intended for CPS Holders who:

are Australian residents for tax purposes;

hold their CPS on capital account;

are not subject to the Taxation of Financial Arrangements (TOFA) rules; and

acquire CPS through the initial subscription under the Prospectus (including by way of the
Reinvestment Offer for Eligible PEPS Holders).
This summary provides a general overview of the Australian tax consequences arising for CPS
Holders. In particular, this summary does not cover the tax consequences which may arise for
CPS Holders who intend to hold their CPS as trading stock or revenue assets. It also does not
          
       
      
87
BOQ CPS PROSPECTUS 2012
      
  
For personal use only

Bank of Queensland Limited
Bank of Queensland Convertible Preference Shares
(CPS)
Australian Tax Summary
19 November 2012
apply to non-residents. As such, all CPS Holders should seek independent tax advice about
their own specific circumstances.
2
Anticipated ATO class ruling
BOQ has applied to the Australian Tax Office (ATO) for a public class ruling (Class Ruling)
confirming certain income tax issues discussed below.
Class rulings are public rulings that enable the Commissioner of Taxation to provide binding
confirmation about the application of tax law to a specific class of persons, in relation to a
particular scheme.
In accordance with usual practice, a class ruling will only be issued sometime after the public
announcement of a transaction and will not become operative until it is published in the
Government Gazette.
When issued, it is expected that the Class Ruling will only apply to CPS Holders referred to in
the scope above.
When the Class Ruling is published, it will be available for downloading from BOQ’s website
(www.boq.com.au) and from the ATO’s website (www.ato.gov.au).
3
Tax consequences for certain Australian resident CPS Holders
3.1
Dividends on CPS
CPS should be characterised as “equity interests” for income tax purposes.
Accordingly, a CPS Holder must include Dividends paid in respect of CPS in their assessable
income in the income year in which the Dividend is paid.
Provided a CPS Holder is a “qualified person” (discussed below), they must also include any
franking credits attached to the Dividends in their assessable income and they will be entitled to
obtain a tax offset for the amount of franking credits attached to the Dividends.
A person is a “qualified person” if, generally speaking, they satisfy the “holding period” rule
and the “related payments” rule.
The “holding period” rule requires CPS to have been continuously held “at risk” for a period of
at least 90 days (excluding the day of acquisition and the day of disposal, and any days on
which the CPS Holder has materially diminished risks of loss or opportunities for gain in
respect of the CPS) in the period beginning on the day after the day on which CPS are acquired
and ending on the 90th day after the day on which CPS become ex-dividend.
The “related payments” rule applies where the taxpayer or an associate has made, is under an
obligation to make, or is likely to make, a related payment in respect of the dividend and
requires the shares to have been continuously held “at risk” for a period of at least 90 days
(excluding the day of acquisition and the day of disposal, and any days on which the CPS
Holder has materially diminished risks of loss or opportunities for gain in respect of CPS) in the
period beginning on the 90th day before and ending on the 90th day after the day on which CPS
become ex-dividend.
15864379_3
2
BOQ CPS PROSPECTUS 2012
88
7. AUSTRALIAN TAXATION SUMMARY
For personal use only

A CPS Holder will be “at risk” where positions taken by the taxpayer do not materially diminish
the risk or opportunities in respect of holding CPS.
CPS Holders who have total franking tax offsets below $5,000 in a year (from all sources) will
automatically be “qualified persons” in respect of CPS unless they are subject to the “related
payments” rule.
3.2
Anti-avoidance rule
Section 177EA of the Income Tax Assessment Act 1936 is an anti-avoidance provision that
applies to schemes where one of the purposes (other than an incidental purpose) is to obtain an
imputation benefit. Where Section 177EA applies, the Commissioner may make a written
determination with the effect of either:

imposing franking debits on BOQ’s franking account; or

denying the imputation benefit on the distribution that flowed directly or indirectly to CPS
Holders.
Based on our discussions with the ATO, and other class rulings which have recently been issued
for similar instruments, we expect that the Commissioner will confirm in the Class Ruling that
there will be no determination made under Section 177EA to deny the whole, or any part, of the
imputation benefits received by CPS Holders in relation to the Dividends.
3.3
Acquisition date and cost base for Capital Gains Tax (CGT)
Each CPS will be taken to have been acquired for CGT purposes on the date BOQ issues CPS
(which is expected to be 24 December 2012).
The cost base (or reduced cost base) for each CPS will include $100 (being the Face Value of
CPS). The cost base (or reduced cost base) should also include any incidental costs (e.g. adviser
or broker fees) associated with the acquisition or disposal of CPS. The cost base (or reduced
cost base) is relevant for determining the amount of any capital gain (or capital loss) resulting
on a subsequent disposal of CPS.
3.4
Sale of CPS
CPS Holders selling their CPS on the Australian Securities Exchange (ASX) will make a capital
gain when the sale proceeds exceed the cost base and will make a capital loss when the reduced
cost base exceeds the sale proceeds. A capital gain (net of capital losses) will be included in the
CPS Holder’s assessable income. A capital loss may be applied against the CPS Holder’s other
capital gains or potentially carried forward for future years.
Where the CPS have been held for at least 12 months prior to the sale (excluding the day of
acquisition and the day of disposal) and the CPS Holder is an individual, trustee of a trust, or a
complying superannuation fund, they may be eligible to apply a CGT discount to reduce the
amount of the taxable capital gain. Individuals and trusts are entitled to a 50% CGT discount
and complying superannuation funds are entitled to a 331/3% CGT discount. Companies are
generally not entitled to the CGT discount.
15864379_3
89
Bank of Queensland Limited
Bank of Queensland Convertible Preference Shares
(CPS)
Australian Tax Summary
19 November 2012
BOQ CPS PROSPECTUS 2012
3
For personal use only

3.5
Bank of Queensland Limited
Bank of Queensland Convertible Preference Shares
(CPS)
Australian Tax Summary
19 November 2012
Redemption of CPS
If the Bank Redeems the CPS, they will be redeemed, bought back (off-market) or cancelled
pursuant to a reduction of capital, or a combination of these methods. The tax consequences of
any Redemption depends on the method of the Redemption. It is expected that further
information about the tax implications of a Redemption would be provided to the CPS Holders
by BOQ prior to any Redemption of CPS.
3.6
Conversion of CPS into Ordinary Shares in BOQ
The Conversion of each CPS into an Ordinary Share, and the allotment of any additional
Ordinary Shares, will not result in a CGT event for CGT purposes which would give rise to a
capital gain or capital loss at the time of Conversion.
The allotment of any additional Ordinary Shares will not be assessable as a dividend or as
ordinary income in the hands of the CPS Holders.
Each Ordinary Share received as a result of the Conversion will be taken to have been acquired
for CGT purposes on the date BOQ issues CPS (which is expected to be 24 December 2012).
As a result of the Conversion, CPS Holders will apportion the original cost base (or reduced
cost base) of CPS across all of the Ordinary Shares held by the CPS Holder (ie CPS converted
into an ordinary share and any additional ordinary shares). The cost base (or reduced cost base)
is relevant for determining the amount of any capital gain (or capital loss) resulting on a
disposal of the Ordinary Shares.
3.7
Conversion of CPS into Ordinary Shares in a NOHC
In the event an Approved NOHC replaces BOQ as the ultimate holding company of the Group,
the CPS Terms may be amended to effect the issue of Approved NOHC Shares to CPS Holders
in substitution for Ordinary Shares upon Conversion of CPS.
The CPS Holders will not make a capital gain or loss as a result of the amendment to the CPS
Terms, provided they do not receive any proceeds (and do not incur any incidental costs) as a
result.
Where there is a Conversion subsequent to the interposition of an Approved NOHC, a capital
gain or loss will not arise for CPS Holders due to the operation of special rules in the CGT
provisions (ie where, on Conversion, the CPS Holder receives Approved NOHC Shares in
substitution for Ordinary Shares).
Each Approved NOHC Share received as a result of Conversion will be taken to have been
acquired for CGT purposes on the date of Conversion (ie not on the date BOQ issues the CPS).
3.8
Write Off
CPS may be Written Off (rather than converted) in certain circumstances following a Capital
Trigger Event or a Non-Viability Trigger Event. If CPS are Written Off, there is a variation of
the rights attaching to CPS with respect to dividends and returns of capital. CPS Holders will
15864379_3
4
BOQ CPS PROSPECTUS 2012
90
7. AUSTRALIAN TAXATION SUMMARY
For personal use only

continue to hold their CPS. The variation will not result in a CGT event for the CPS Holders
for CGT purposes which would give rise to a capital gain or capital loss.
4
Reinvestment Offer - PEPS
Eligible PEPS Holders may fund the acquisition of CPS by electing to participate in the
selective buy-back of their PEPS, with the proceeds being used to subscribe for CPS (in
accordance with the Reinvestment Offer).
The selective buy-back of PEPS will result in a disposal of PEPS for the buy-back price, being
their $100 face value. Participating Eligible PEPS Holders will make a capital gain where the
buy-back price is greater than the cost base of their PEPS. Participating Eligible PEPS Holders
will make a capital loss where the buy-back price is lower than the reduced cost base of their
PEPS. As the buy-back price is equal to the face value of PEPS on issuance, Eligible PEPS
Holders that acquired their PEPS on initial subscription should not incur a capital gain as a
result of electing to participate in the selective buy back of their PEPS.
If Eligible PEPS Holders derive a capital gain on the selective buy-back of their PEPS (eg as a
result of acquiring PEPS on market for less than $100 face value), the CGT discount discussed
above regarding the sale of CPS may also be available.
Eligible PEPS Holders that reinvest in CPS will receive a Pro Rata Dividend on their
Reinvested PEPS, to be paid on the Reinvested PEPS Buy-back Date. Such a dividend will be
assessable income to the Eligible PEPS Holder in accordance with the principles set out above
in Section 3.1.
5
Goods and Services Tax (GST)
CPS Holders should not be liable for GST at the time of acquiring, converting or disposing of
their CPS (or as a result of having their PEPS bought back).
CPS Holders who are registered for GST are unlikely to be entitled to an input tax credit in
respect of GST on costs associated with the acquisition of CPS.
6
Stamp duty
Stamp duty should not be payable on an Application, including the acquisition of CPS and the
disposal of PEPS through the selective buy-back.
*
*
*
*
*
Our tax opinion is based on current taxation law as at the date our advice is provided. You will
appreciate that the tax law is frequently being changed, both prospectively and retrospectively.
A number of key tax reform measures have been implemented, a number of other key reforms
have been deferred and the status of some key reforms remains unclear at this stage.
Unless special arrangements are made, this advice will not be updated to take account of
subsequent changes to the tax legislation, case law, rulings and determinations issued by the
15864379_3
91
Bank of Queensland Limited
Bank of Queensland Convertible Preference Shares
(CPS)
Australian Tax Summary
19 November 2012
BOQ CPS PROSPECTUS 2012
5

Bank of Queensland Limited
Bank of Queensland Convertible Preference Shares
(CPS)
Australian Tax Summary
19 November 2012
For personal use only

Bank of Queensland Limited
Bank of Queensland Convertible Preference Shares
(CPS)
Australian Commissioner of Taxation or other practices of taxation authorities.
It is your
Australian
Tax Summary
responsibility to take further advice, if you are to rely on our advice at a later date.
19 November 2012
We are, of course, unable to give any guarantee that our interpretation will ultimately be
sustained in the event of challenge by the Australian Commissioner of Taxation.
KPMG's Tax practice is not licensed to provide financial product advice under the Corporations
Australian
Commissioner
of of
Taxation
or other
of taxation when
authorities.
It aisdecision
your on a
Act
and taxation
is only one
the matters
that practices
must be considered
making
responsibility
to take
if you
areadvice
to rely from
on our
at a later
date. Services
financial
product.
Youfurther
shouldadvice,
consider
taking
anadvice
Australian
Financial
Licence holder before making any decision on a financial product.
We are, of course, unable to give any guarantee that our interpretation will ultimately be
sustained in the event of challenge by the Australian Commissioner of Taxation.
Yours faithfully
KPMG's Tax practice is not licensed to provide financial product advice under the Corporations
Act and taxation is only one of the matters that must be considered when making a decision on a
financial product. You should consider taking advice from an Australian Financial Services
Licence holder before making any decision on a financial product.
KPMG
Yours faithfully
KPMG
15864379_3
6
BOQ CPS PROSPECTUS 2012
92
For personal use only
93
8
SUMMARY OF
IMPORTANT
DOCUMENTS
BOQ CPS PROSPECTUS 2012
This Section contains summary of important documents relating to the Offer.
8.1Overview of rights and liabilities attaching
to CPS
For personal use only
8
8. SUMMARY OF IMPORTANT DOCUMENTS
Rights attaching to CPS are contained in the CPS Terms in Appendix A
which are explained further in Section 2.
Some of the rights attaching to CPS are linked with rights arising under
other documents, for example, CPS may be Converted into Ordinary Shares
in certain circumstances. The rights attaching to Ordinary Shares are set out
in BOQ’s Constitution, the ASX Listing Rules and the Corporations Act.
For a summary of important rights attaching to the Ordinary Shares - see
Section 8.2.
8.2Rights and liabilities attaching to
Ordinary Shares
Ordinary Shares may be issued to you if your CPS are Converted into
Ordinary Shares under the CPS Terms. Any Ordinary Shares issued on
Conversion will be fully paid and will rank equally with the Ordinary Shares
already on issue.
The rights attaching to Ordinary Shares are contained in the Constitution
and, in certain circumstances, are regulated by the Corporations Act, the
ASX Listing Rules, the ASX Operating Settlement Rules and the general law.
BOQ proposes that at the AGM on 13 December 2012, Ordinary
Shareholders adopt a new constitution to replace the current Constitution.
The new constitution will provide for a number of changes in law and
Listing Rules since the Constitution was last comprehensively reviewed in
1995 and include a number of updated corporate administrative practices,
including taking account of changes in communications technology. It is
not proposed to alter the rights attaching to Ordinary Shares. The summary
below will apply equally if the new constitution is adopted.
Ordinary Shareholders:
(a)are entitled to receive all notices of, and to attend, general meetings
of BOQ and to receive all notices, accounts and other documents
required to be sent to Ordinary Shareholders under the Constitution,
the Corporations Act or the ASX Listing Rules;
(b)are entitled to be present in person or by proxy, attorney or
representative at a meeting of Ordinary Shareholders, to one vote
on a show of hands and, on a poll, to one vote for every fully paid
Ordinary Share held, and a proportionate vote for every partly paid
Ordinary Share, registered in that Ordinary Shareholder’s name on
BOQ’s share register;
(c)are entitled to receive dividends on the Ordinary Shares declared or
determined by the Board; and
BOQ currently has two classes of shares on issue - PEPS and Ordinary
Shares. Following a successful completion of the Offer, CPS will also be on
issue. The transfer procedures referred to in (d) above are applicable to all
shares on issue.
On a winding up, once all the liabilities of BOQ are satisfied, any surplus
must then be used to return the capital represented by the CPS and the PEPS
(ranking equally) and then the return of capital represented by the Ordinary
Shares, in that order. Ordinary Shareholders are entitled to any surplus on
winding up after the return of capital.
A liquidator may, with the authority of a special resolution of Ordinary
Shareholders, divide the whole or any part of the remaining assets of BOQ
among the Ordinary Shareholders at the time. The liquidator may, with the
sanction of a special resolution of the Ordinary Shareholders, vest the whole
or any part of the assets in trust for the benefit of Ordinary Shareholders
as the liquidator thinks fit. However, no Ordinary Shareholder can be
compelled to accept any shares or other securities in respect of which there
is any liability.
The Constitution may be amended only by a special resolution passed by
Ordinary Shareholders.
The Directors may (subject to the restrictions on the allotment of shares
imposed by the Constitution, the ASX Listing Rules and the Corporations
Act) allot or otherwise dispose of further Ordinary Shares or other securities
on such terms and conditions as they see fit.
A copy of the current Constitution and the proposed new constitution are
available online at the BOQ website - www.boq.com.au.
8.3Rights and liabilities attaching to Approved
NOHC Shares
If there is a NOHC Event and the CPS Terms are amended to enable
substitution of the NOHC as the issuer of ordinary shares on Conversion
(including Mandatory Conversion), the rights and liabilities of the Approved
NOHC Shares are not expected to be materially different to the rights and
liabilities of Ordinary Shares in BOQ. The Approved NOHC will be obliged
to use all reasonable endeavours to obtain quotation of the Approved NOHC
Shares issued on Conversion.
8.4Summary of the Offer Management
Agreement
8.4.1Overview
BOQ and the Joint Lead Managers signed the Offer Management Agreement
on 7 November 2012. Under the Offer Management Agreement, BOQ
appointed Commonwealth Bank of Australia, Merrill Lynch International
(Australia) Limited, National Australia Bank Limited and RBS Morgans
Limited as Joint Lead Managers of the Offer. The following is a summary of
the principal provisions of the Offer Management Agreement.
(d)may transfer shares by a market transfer according to any
computerised or electronic system established or recognised by
ASX or the Corporations Act for the purpose of facilitating transfers
in Ordinary Shares or by an instrument in writing in a form approved
by ASX, in any other usual form or in any form approved by the
Directors.
BOQ CPS PROSPECTUS 2012
94
For personal use only
Under the Offer Management Agreement, the Joint Lead Managers have
agreed to manage the Offer, conduct the Bookbuild process and, together
with BOQ, determine the Margin. The Joint Lead Managers have agreed
to, in consultation with BOQ, determine Allocations of CPS to Bookbuild
participants. The Joint Lead Managers have agreed to provide settlement
support for the settlement obligations of successful Applicants under the
Broker Firm Offer. Merrill Lynch and RBS Morgans have agreed to provide
settlement support for the settlement obligations of successful Applicants
under the Institutional Offer.
ıı
BOQ’s Ordinary Shares are delisted, removed from quotation or
suspended from quotation on the ASX (other than at the request of BOQ
and with the prior approval of the Joint Lead Managers);
ıı
any person (other than a Joint Lead Manager) withdraws their consent
to be named in the Prospectus;
ıı
BOQ withdraws or notifies of an intention to withdraw the Prospectus
or the Offer;
ıı
a supplementary prospectus is, in the reasonable opinion of a Joint
Lead Manager, required under section 719 of the Corporations Act or
required to comply with section 257G of the Corporations Act;
ıı
a credit rating assigned to the BOQ Group at the date of the Offer
Management Agreement by Standard & Poor’s is downgraded,
withdrawn, or placed on credit watch negative;
ıı
confirmations received from ASIC, ASX and APRA in connection with
the Offer are withdrawn;
ıı
the S&P ASX 200, the All Ordinaries Index of ASX or the Dow Jones
Industrial Average:
8.4.2Fees
The estimated aggregate fees payable by BOQ under the Offer Management
Agreement are set out in Section 9.2. The actual amount payable will not be
known until the allocation of CPS under the Offer.
In addition, BOQ must reimburse each Joint Lead Manager for reasonable
expenses, including reasonable legal and travel costs, incurred by the Joint
Lead Managers in relation to the Offer.
8.4.3Representations, warranties and undertakings
BOQ gives various representations, warranties and undertakings to the Joint
Lead Managers, including that the documents issued or published by or
on behalf of BOQ in respect of the Offer comply with all applicable laws,
including the Corporations Act and the ASX Listing Rules.
With the exception of the CPS issue, BOQ has also agreed that it will
not (and will ensure that its subsidiaries do not), without the Joint Lead
Manager’s prior written consent, allot, agree to allot, announce an issue of,
indicate any way that it may or will allot or otherwise authorise the issue
of, any ASX listed hybrid or preference securities in Australia with Tier 1
Capital status at any time after the date of the Offer Management Agreement
and before the expiration of 90 days after the settlement date of the Offer
Management Agreement (other than pursuant to the Offer, an employee
share or option plan, a bonus share plan, a dividend reinvestment plan or
an underwriting of a dividend reinvestment plan, a share purchase plan or
underwriting of a share purchase plan or in accordance with the terms of
issue of securities or financial products on issue on the date of the Offer
Management Agreement).
8.4.4Indemnity
BOQ agrees to indemnify the Joint Lead Managers, their affiliates and the
officers, directors, employees, partners, agents, advisers and representatives
of the Joint Lead Managers and their affiliates against all claims, demands,
damages, losses, costs, expenses, liabilities, or actions incurred by them in
connection with the Offer (subject to limited exclusions).
8.4.5 Termination events
Until 5:00pm on the settlement date of the Offer Management Agreement,
each Joint Lead Manager may terminate its obligations under the Offer
Management Agreement on the occurrence of a number of customary
termination events, including (among others) if:
95
ıı
ASIC issues a stop order in relation to the Offer;
ıı
ASX refuses to quote CPS on ASX;
BOQ CPS PROSPECTUS 2012
ıı
––
closes on any 3 consecutive Business Days at a level that is 10%
or more below the level of that index as at the close of business
on the Business Day prior to the date of the Offer Management
Agreement (Starting Level); or
––
closes at a level that is 10% or more below the Starting Level at
any time during the 2 Business Days prior to the settlement date
of the Offer Management Agreement; or
––
closes at a level that is 15% or more below the Starting Level; and
an adverse change occurs or becomes known in the assets, liabilities,
financial position or performance, profits, losses or prospects of BOQ
or its subsidiaries.
Certain of these events will only give rise to a right to terminate if the Joint
Lead Manager reasonably believes that the event or a series of events
together has or is likely to have a material adverse effect on the Offer or that
the Joint Lead Manager or its affiliates has or is likely to contravene, be
involved in a contravention of, or incur a liability under the Corporations
Act or any other applicable law or regulation as a result of the event or the
series of events. If this occurs, the Joint Lead Manager who terminates will
no longer be a lead manager and will be relieved of its obligations under the
Offer Management Agreement.
Under the Offer Management Agreement, if one Joint Lead Manager
terminates, each other Joint Lead Manager may elect to take up the rights
and obligations of the terminating Joint Lead Manager in proportions to be
agreed with the other remaining Joint Lead Managers, or elect to terminate
its obligations under the Offer Management Agreement.
In addition, the Joint Lead Managers may terminate the Offer Management
Agreement if a condition precedent to the agreement or to settlement is not
satisfied or waived by the relevant time, including but not limited to the
Australian Taxation Office issuing (and not withdrawing) a favourable draft
class ruling in relation to the tax treatment of the CPS in a form satisfactory
to the Joint Lead Managers by 21 December 2012.
For personal use only
9
KEY PEOPLE,
INTERESTS
AND
BENEFITS
BOQ CPS PROSPECTUS 2012
96
9. KEY PEOPLE, INTERESTS AND BENEFITS
9.1.2 Directors’ remuneration
Other than as set out in this Section or elsewhere in this Prospectus, no
Director or proposed director of BOQ holds at the date of this Prospectus, or
has held in the 2 years before the date of this Prospectus, an interest in:
The Directors are paid fees in accordance with the Constitution as
determined by the Board subject to a maximum aggregate amount
determined by resolution of Shareholders, which is currently $2,200,000.
The Managing Director and Chief Executive Officer’s remuneration are fixed
by the Board and may consist of salary, bonuses or other elements but
must not be a commission on or percentage of profits or operating revenue.
Details of Directors’ remuneration are set out in the remuneration report
contained in BOQ’s annual financial report for the year ended 31 August
2012, which was lodged with ASX on 18 October 2012 and is available at
www.boq.com.au or see Section 10.1 for further details about accessing this
and other documents lodged by BOQ.
For personal use only
9.1 Interests of Directors
ıı
the formation or promotion of BOQ;
ıı
the Offer; or
ıı
any property acquired or proposed to be acquired by BOQ in
connection with its formation or promotion or with the Offer,
nor has any amount been paid or agreed to be paid, or benefit given or
agreed to be given, to any Director or proposed director of BOQ:
ıı
ıı
to induce him or her to become, or to qualify him or her as, a director
of BOQ; or
for services provided by him or her in connection with the formation or
promotion of BOQ or with the Offer.
The Directors’ interests in Ordinary Shares and performance award rights of
BOQ as at the date of this Prospectus are as follows:
Ordinary
Shares
97
Performance
award rights
Neil Edwin Summerson
45,599
Nil
Stuart Ian Grimshaw
10,825
121,619
Steven Crane
25,678
Nil
Roger Andrew Davis
4,896
Nil
Carmel Therese Gray
10,946
Nil
Richard George Andrew Haire
4,000
Nil
John Reynolds
5,217
Nil
Michelle Tredenick
2,433
Nil
David Stephen Willis
1,414
Nil
None of the Directors has an interest in PEPS.
BOQ CPS PROSPECTUS 2012
The Directors and certain related persons may acquire CPS offered under
this Prospectus subject to a collective limit of 0.2% of the CPS offered - see
relevant ASX waivers described in Section 10.4.
9.2 Interests of experts and advisers
9.1.1 Interests in BOQ securities
Name
9.1.3 Participation in the Offer
Commonwealth Bank of Australia, Merrill Lynch International (Australia)
Limited, National Australia Bank Limited and RBS Morgans Limited are
acting as Joint Lead Managers for the Offer, in respect of which they will
receive fees from BOQ. The estimated aggregate fees payable by BOQ to the
Joint Lead Managers (and other Syndicate Brokers) are approximately
$5.4 million (exclusive of GST), making certain assumptions as to the
allocations of CPS between the Broker Firm Offer, Institutional Offer,
Reinvestment Offer, Shareholder Offer and General Offer. The aggregate
fees include an institutional selling fee split equally between Merrill Lynch
International (Australia) Limited and RBS Morgans Limited and broker firm
selling and stamping fees payable to the Syndicate Brokers in accordance
with the Offer Management Agreement. Merrill Lynch International
(Australia) Limited has also acted as Structuring Adviser and is entitled to a
structuring fee in relation to that role.
KPMG has acted as tax adviser for BOQ and prepared the taxation letter in
Section 7. BOQ estimates that fees of approximately $95,000 (excluding
disbursements and GST) will be payable to KPMG for this work up to the
date of lodgement of this Prospectus. KPMG may receive further fees for
any additional work done in accordance with its normal time based charges.
KPMG Transaction Services (a division of KPMG Financial Advisory
Services (Australia) Pty Ltd) has provided due diligence services on certain
financial disclosures in relation to the Offer. BOQ estimates that fees of
approximately $60,000 (excluding disbursements and GST) will be payable
to KPMG Transaction Services for this work up to the date of lodgement of
this Prospectus. KPMG Transaction Services may receive further fees for
any additional work done in accordance with its normal time based charges.
Clayton Utz has acted as legal adviser to BOQ and has provided a range
of legal services in connection with the Offer. BOQ estimates that fees of
approximately $450,000 (excluding disbursements and GST) will be payable
to Clayton Utz for this work up to the date of lodgement of this Prospectus.
Clayton Utz may receive further fees for any additional work done in
accordance with its normal time based charges.
9.3 Expenses of the Offer
ıı
The expenses of the Offer (which include offer management, structuring,
advisory, legal, accounting, tax, listing and administrative fees as well
as printing, advertising and other expenses incurred in preparing and
issuing this Prospectus) are, at the date of this Prospectus, estimated to be
approximately $4.9 million (after tax) and are to be paid by BOQ.
For personal use only
Other than as set out above or elsewhere in this Prospectus:
no person named in this Prospectus as having performed a function
in a professional, advisory or other capacity in connection with the
preparation or distribution of this Prospectus;
ıı
nor any promoter of BOQ or underwriter to the Offer;
ıı
nor any financial services licensee named in this Prospectus as a
financial services licensee involved in the Offer,
holds at the date of this Prospectus, or has held in the 2 years before the
date of this Prospectus, any interests in:
ıı
the formation or promotion of BOQ;
ıı
the Offer; or
ıı
any property acquired or proposed to be acquired by BOQ in
connection with its formation or promotion or with the Offer,
nor has any amount been paid or agreed to be paid, or benefit given
or agreed to be given, to any of them for services provided by them in
connection with the formation or promotion of BOQ or with the Offer.
BOQ CPS PROSPECTUS 2012
98
For personal use only
99
10
ADDITIONAL
INFORMATION
BOQ CPS PROSPECTUS 2012
This Section provides information about a number of other matters not
covered elsewhere in this Prospectus.
10.3Consents to be named / to include statements
10.1Disclosing entity information and/or
incorporation by reference information
ıı
has given its written consent to be named in this Prospectus, and at the
date of lodgement of this Prospectus with ASIC, has not withdrawn that
consent;
ıı
has not authorised or caused the issue of this Prospectus;
ıı
does not make, or purport to make, any statement in this Prospectus
or any statement on which a statement made in this Prospectus is
based, other than a statement or report included in this Prospectus as
specified in the paragraphs below; and
ıı
to the maximum extent permitted by law, expressly disclaims and
takes no responsibility for any part of this Prospectus, other than the
reference to its name in the form and context in which it is named.
For personal use only
0
10. ADDITIONAL INFORMATION
As a disclosing entity for the purposes of the Corporations Act and the ASX
Listing Rules, BOQ is subject to regular reporting and continuous disclosure
obligations. These obligations include compliance with the requirements of
the Corporations Act and the ASX Listing Rules concerning notification of
information to the market operated by ASX. Subject to limited exceptions
for certain categories of confidential information set out in the ASX Listing
Rules, BOQ must notify ASX immediately of any information concerning
it which it is, or becomes aware of, and which a reasonable person would
expect to have a material effect on the price or value of its listed securities.
That information is kept on public file with ASX and ASIC. BOQ must also
prepare and lodge with ASIC full year and half yearly financial statements
accompanied by a Directors’ statement and report, and an audit or review
report.
Copies of these and other documents lodged with ASIC may be obtained
from or inspected at an ASIC office.
BOQ will provide a copy of any of the following documents free of charge to
any person who requests a copy during the Offer Period in relation to this
Prospectus:
ıı
ıı
the financial statements of BOQ for the year ended 31 August 2012
(being the most recent annual financial report lodged with ASIC before
the lodgement of this Prospectus); and
any document lodged by BOQ under the continuous disclosure
reporting requirements in the period after the lodgement of its last
annual financial report and before the lodgement of the Prospectus.
Copies of the above documents may be obtained in person or in writing from
BOQ at:
Bank of Queensland Limited
Level 17, 259 Queen Street
BRISBANE QLD 4000
Copies of these documents are also available online via the BOQ website at
www.boq.com.au
10.2Restrictions on ownership for BOQ
The Financial Sector (Shareholdings) Act 1998 (Cth) restricts the aggregate
voting power of a person and their associates in an Australian authorised
deposit-taking institution to 15%. A shareholder may apply to the Treasurer
to extend its stake beyond 15%, however approval cannot be granted unless
the Treasurer is satisfied that it is in the national interest to approve a
holding of greater than 15%.
Acquisitions of interests in shares in Australian companies by foreign
persons are subject to review and approval by the Treasurer under the
Foreign Acquisitions and Takeovers Act 1975 (Cth) in certain circumstances.
Potential investors should consult their professional advisers to determine
whether the Foreign Acquisitions and Takeovers Act may affect their holding
or ownership of CPS or Ordinary Shares.
Each of the entities below (each a Consenting Party):
The Consenting Parties are:
ıı
Commonwealth Bank of Australia;
ıı
Merrill Lynch International (Australia) Limited;
ıı
National Australia Bank Limited;
ıı
RBS Morgans Limited;
ıı
Bell Potter Securities Limited;
ıı
Ord Minnett Limited;
ıı
KPMG, which has also given, and at the date of lodgement of this
Prospectus with ASIC, has not withdrawn, its consent to the inclusion
of the taxation letter in Section 7 in the Prospectus in the form and
context in which it is included;
ıı
KPMG Transaction Services;
ıı
Clayton Utz; and
ıı
Link Market Services Limited.
10.4ASX waivers and confirmations
BOQ has obtained the following confirmations and waivers from ASX:
ıı
a confirmation that the CPS are equity securities for ASX Listing
Rule purposes;
ıı
a confirmation that the terms of the CPS are appropriate and equitable
for the purposes of ASX Listing Rule 6.1;
ıı
a waiver from ASX Listing Rules 6.3.2 in relation to the right to cast
votes of CPS Holders in relation to a Redemption under the CPS Terms;
ıı
a confirmation that the CPS Terms satisfy the requirements of ASX
Listing Rule 6.5;
ıı
a confirmation that the CPS Terms confer an entitlement to a return of
capital in preference to holders of ordinary securities on winding up or end
of the company for the purposes of ASX Listing Rule 6.6;
BOQ CPS PROSPECTUS 2012
100
10. ADDITIONAL INFORMATION
ıı
For personal use only
a confirmation that ASX Listing Rules 6.10 and 6.12 do not apply to the
Distribution Restriction or to Redemption or Conversion of CPS under
the CPS Terms;
ıı
a confirmation that the conversion rate for the CPS for the purposes of
ASX Listing Rule 7.1B.1 will be taken to be the market price of Ordinary
Shares at the close of trading on the Business Day immediately before
the date of the Prospectus;
ıı
a waiver from ASX Listing Rule 10.11 to permit the Directors and their
associates to be issued with CPS under the Offer without the approval
of Ordinary Shareholders, provided that collectively those issues do
not exceed 0.2% of the CPS issued under the Offer, the participation of
those persons in the Offer is on the same terms and conditions as other
subscribers, the terms of the waiver are disclosed in this Prospectus
and BOQ announces to the market the aggregate number of CPS issued
to those persons;
ıı
a confirmation that ASX considers an issue of ordinary securities on
conversion of CPS to directors and their related parties will not require
shareholder approval in accordance with ASX Listing Rule 10.12,
exception 7; and
ıı
a waiver of ASX Listing Rule 14.11 to the extent necessary to permit
BOQ to omit from the voting exclusion statement in the notice of
meeting relating to the approval of the issue of CPS for the purposes of
ASX Listing Rule 7.1, holders acting solely in a fiduciary, nominee or
custodial capacity (Nominee Holders) on behalf of beneficiaries who
did not participate in the Offer where such Nominee Holders may have
participated in the Offer themselves or for other beneficiaries.
In relation to the Reinvestment Offer, ASX has confirmed that:
ıı
the amendments to the PEPS terms of issue are appropriate and
equitable for the purposes of ASX Listing Rule 6.1; and
ıı
the early Pro-Rata Dividend payment is permitted under Listing
Rule 6.10.
10.5ASIC relief
ASIC relief has been obtained to enable BOQ to issue a “transaction specific”
prospectus that complies with section 713 of the Corporations Act in relation
to the Offer.
10.6Foreign selling restrictions
This Prospectus does not constitute an offer of CPS in any jurisdiction in
which it would be unlawful. CPS may not be offered or sold in any country
outside Australia or New Zealand except to the extent permitted below.
10.6.1 Hong Kong
WARNING: This Prospectus has not been, and will not be, registered as a
prospectus under the Companies Ordinance (Cap. 32) of Hong Kong (the
“Companies Ordinance”), nor has it been authorised by the Securities and
Futures Commission in Hong Kong pursuant to the Securities and Futures
Ordinance (Cap. 571) of the Laws of Hong Kong (the “SFO”). No action
has been taken in Hong Kong to authorise or register this Prospectus or
to permit the distribution of this document or any documents issued in
connection with it. Accordingly, CPS have not been and will not be offered
or sold in Hong Kong other than to “professional investors” (as defined in
the SFO).
No advertisement, invitation or document relating to CPS has been or will
be issued, or has been or will be in the possession of any person for the
purpose of issue, in Hong Kong or elsewhere that is directed at, or the
contents of which are likely to be accessed or read by, the public of Hong
Kong (except if permitted to do so under the securities laws of Hong Kong)
other than with respect to CPS that are or are intended to be disposed of
only to persons outside Hong Kong or only to professional investors (as
defined in the SFO and any rules made under that ordinance). No person
allotted CPS may sell, or offer to sell, such securities in circumstances that
amount to an offer to the public in Hong Kong within six months following
the date of issue of such securities
The contents of this Prospectus have not been reviewed by any Hong Kong
regulatory authority. You are advised to exercise caution in relation to the
offer. If you are in doubt about any contents of this document, you should
obtain independent professional advice.
10.6.2Singapore
This Prospectus and any other materials relating to the CPS have not been,
and will not be, lodged or registered as a prospectus in Singapore with the
Monetary Authority of Singapore. Accordingly, this Prospectus and any
other document or materials in connection with the offer or sale, or invitation
for subscription or purchase, of CPS, may not be issued, circulated or
distributed, nor may the CPS be offered or sold, or be made the subject of
an invitation for subscription or purchase, whether directly or indirectly, to
persons in Singapore except pursuant to and in accordance with exemptions in
Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter
289 of Singapore (SFA), or as otherwise pursuant to, and in accordance with
the conditions of any other applicable provisions of the SFA.
This document has been given to you on the basis that you are (i) an
existing holder of BOQ’s shares, (ii) an “institutional investor” (as defined
in the SFA) or (iii) a “relevant person” (as defined in section 275(2) of
the SFA). In the event that you are not an investor falling within any of the
categories set out above, please return this document immediately. You may
not forward or circulate this document to any other person in Singapore.
Any offer is not made to you with a view to the CPS being subsequently
offered for sale to any other party. There are on-sale restrictions in Singapore
that may be applicable to investors who acquire CPS. As such, investors are
advised to acquaint themselves with the SFA provisions relating to resale
restrictions in Singapore and comply accordingly.
101
BOQ CPS PROSPECTUS 2012
10.6.3United States
For personal use only
This Prospectus may not be released or distributed in the United States.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in the United States. Any securities described in this
document have not been, and will not be, registered under the US Securities
Act of 1933 and may not be offered or sold in the United States except
in transactions exempt from, or not subject to, registration under the US
Securities Act and applicable US state securities laws.
10.7Privacy Statement
By making an Application for CPS, you are providing personal information
to BOQ through BOQ’s service provider, Link Market Services Limited, which
is contracted by BOQ to manage Applications. BOQ, and the Registry on
its behalf, collect, hold and use that personal information to process your
Application, service your needs as a CPS Holder, provide facilities and
services that you request and carry out appropriate administration.
If you do not provide the information requested, BOQ and the Registry
may not be able to process or accept your Application. By submitting an
Application, each Applicant agrees that BOQ and the Registry may use the
information provided by an Applicant (including in an Application Form) for
the purposes set out in this privacy disclosure statement and may disclose
it in accordance with BOQ’s privacy policy for those purposes to BOQ, and
to its related bodies corporate, the Joint Lead Managers, agents, contractors
and third party service providers, including mailing houses and professional
advisers, and to ASX and other regulatory authorities.
Information contained in BOQ’s register of members is also used to facilitate
dividend payments and corporate communications (including BOQ’s
financial results, annual reports and other information that BOQ may wish
to communicate to its shareholders) and compliance by BOQ with legal
and regulatory requirements. An Applicant has a right to gain access to
the information that BOQ and the Registry hold about that person, subject
to certain exemptions under law. A fee may be charged for access. Access
requests must be made in writing or by telephone call to the Registry, details
of which are disclosed in the Corporate Directory. Applicants can obtain a
copy of BOQ’s privacy policy by visiting the BOQ website - www.boq.com.au.
10.8Governing law
This Prospectus and the contracts that arise from the acceptance of the
Applications are governed by the laws applicable in Queensland and each
Applicant submits to the exclusive jurisdiction of the courts of Queensland.
10.9Authorisation of this Prospectus
Each Director has authorised the issue of this Prospectus and has consented
to the lodgement of this Prospectus with ASIC.
The types of agents and service providers that may be provided with
your personal information and the circumstances in which your personal
information may be shared are:
ıı
The Registry (or another service provider) for ongoing administration
of the shareholder register;
ıı
Printers and other companies for the purpose of preparation and
distribution of statements and for handling mail;
ıı
Market research companies for the purpose of analysing BOQ’s
shareholder base and for product development and planning; and
ıı
Legal and accounting firms, auditors, contractors, consultants and
other advisers for the purpose of administering, and advising on, BOQ’s
securities and for associated actions.
If an Applicant becomes a CPS Holder, the Corporations Act requires BOQ
to include information about the shareholder (including name, address and
details of the CPS held) in its public register of members. The information
contained in BOQ’s register of members must remain there even if that
person ceases to be a shareholder.
BOQ CPS PROSPECTUS 2012
102
For personal use only
103
APPENDIX A –
CPS TERMS
BOQ CPS PROSPECTUS 2012
APPENDIX A – CPS TERMS
1.Description
For personal use only
The following are the terms and conditions of fully-paid, unsecured, perpetual preference shares, paying discretionary, floating rate non-cumulative
dividends (the BOQ CPS). The BOQ CPS may be Converted, Redeemed or Transferred according to these Terms of Issue.
2.Issuer
The BOQ CPS will be issued by Bank of Queensland Limited ABN 32 009 656 740 (Bank) under the Constitution and on the terms and conditions set
out in these Terms of Issue.
3.Denomination
The denomination of each BOQ CPS will be the Face Value. Each BOQ CPS will be issued as fully paid.
4.
Face Value
The Face Value of each BOQ CPS will be $100.
5.Maturity
The BOQ CPS are perpetual and have no maturity date.
6.Dividends
6.1Calculation
Subject to these Terms of Issue, the BOQ CPS will pay a cash dividend on each relevant Dividend Payment Date (each a Dividend). The Dividend is
calculated as:
Dividend = Dividend Rate x Face Value x D
365
where:
D is the number of days in the period from (and including):
(a) for the first Dividend Payment Date, the Issue Date until (but not including) the first Dividend Payment Date; and
(b)for any subsequent Dividend Payment Date, the preceding Dividend Payment Date until (but not including) the relevant Dividend Payment Date,
(each such period a Dividend Period);
Dividend Rate has the meaning given in clause 6.2;
Face Value has the meaning given in clause 4.
6.2
Dividend Rate
The Dividend Rate (expressed as a percentage rate per annum) is:
(BBR + Margin) x (1-t)
where:
BBR means the Bank Bill Swap Rate (expressed as a percentage per annum) on the first Business Day of the Dividend Period;
Margin means the margin (expressed as a percentage per annum) determined under the Bookbuild;
t is the Australian corporate tax rate applicable to the franking account of the Bank at the relevant Dividend Payment Date, expressed as a decimal.
BOQ CPS PROSPECTUS 2012
104
APPENDIX A – CPS TERMS
6.3
Gross-up for partly franked dividends
For personal use only
If any Dividend is not franked to 100% under Part 3-6 of the Tax Act (or any provisions that revise or replace that Part), the Dividend will be adjusted in
accordance with the following formula:
Dividend =
d
1 - [t x (1 - f)]
where:
d – is the Dividend calculated under clause 6.1;
t – has the meaning given in clause 6.2; and
f – is the franking percentage (within the meaning of Part 3-6 of the Tax Act or any provisions that revise or replace that Part) applicable to the
franking account of the Bank at the relevant Dividend Payment Date, expressed as a decimal.
6.4
Dividend Payment Date
Dividends will be payable on the BOQ CPS in arrears on each Dividend Payment Date, with the first Dividend Payment Date being on 15 April 2013
and thereafter semi-annually on each 15 April and 15 October until the BOQ CPS are Converted or Redeemed (in which case the Conversion Date or
Redemption Date, as the case may be, will be the final Dividend Payment Date). In the event that BOQ CPS are Transferred, the Transfer Date will be a
Dividend Payment Date for those BOQ CPS (but will not be the final Dividend Payment Date for those BOQ CPS).
6.5Non-cumulative
(a)Dividends are non-cumulative. If all or any part of a Dividend is not paid because of the provisions of these Terms of Issue or because of any
applicable law, the Bank will have no liability to pay, and the Holders will have no right to be paid, any amount in respect of that Dividend.
(b)The Holders will have no claim or entitlement (including without limitation on winding up of the Bank) in respect of such non-payment, and such
non-payment will not constitute an event of default or give Holders any right to apply for the winding-up or administration of the Bank, or cause a
receiver, or receiver and manager, to be appointed in respect of the Bank.
(c) No interest accrues on any unpaid Dividend and the Holder has no claim or entitlement in respect of interest on any unpaid Dividend.
6.6
Conditions to dividend payments
The payment of a Dividend (including on Conversion, Redemption or Transfer) is subject to:
(a) the Directors, in their absolute discretion, determining that the Dividend is payable;
(b) the Bank being lawfully able to pay the Dividend under the Corporations Act;
(c)payment of the Dividend not resulting in any breach of APRA’s then prevailing capital adequacy standards and guidelines as they are applied to
the Group at the time, unless otherwise approved by APRA; and
(d) APRA not otherwise objecting to the payment on the relevant Dividend Payment Date.
Without limiting clause 6.6(a), the Directors will not determine a Dividend to be payable if, in their opinion, making the payment would result in the
Bank becoming, or being likely to become, insolvent for the purposes of the Corporations Act.
6.7
Record date for Dividends
A Dividend is only payable to those persons registered as Holders on the date which is 11 Business Days before the Dividend Payment Date for that
Dividend, or such other date as may be required by the ASX from time to time and adopted by the Bank.
6.8Deductions
The Bank may deduct or withhold from any Dividend or amount payable on Redemption (or upon or with respect to the issuance of any Ordinary
Shares upon any Conversion), the amount of any withholding or other tax, duty, assessment, levy, government charge or other amount, as required
by applicable law or any agreement with a governmental authority. If any such deduction or withholding has been made and paid over or accounted
for by the Bank to the relevant governmental authority and the balance of the Dividend or other amount payable has been paid (or, in the case of a
Conversion, Ordinary Shares have been issued) to the Holder concerned, then the full amount payable to such Holder (or, in the case of a Conversion,
the Conversion Number of Ordinary Shares) will be taken to have been duly paid and satisfied (or, in the case of a Conversion, issued) by the Bank.
The Bank shall pay the full amount required to be deducted or withheld to the relevant governmental authority within the time allowed for such payment
without incurring any penalty under applicable law and must, if requested by the relevant Holder, deliver to that Holder confirmation of that payment
without delay after it is received by the Bank from the relevant governmental authority.
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BOQ CPS PROSPECTUS 2012
Means of payment
(a) The Bank may pay a person entitled to any Dividend or other moneys payable in respect of a BOQ CPS by:
For personal use only
6.9
(i) cheque made payable to the person and sent to:
A. the address of that person in the register of BOQ CPS;
B. if the BOQ CPS is jointly held, the address of the first named joint holder in the register of BOQ CPS; or
C. such other address which that person has notified in writing;
(ii) crediting an account nominated in writing by that person; or
(iii) such other means for the payment of money determined by the Directors.
(b)The despatch of payment by the Bank to any Holder or any one of joint Holders or otherwise in accordance with this clause 6.9 will be taken to
discharge the Bank’s liability in respect of the payment.
(c)If the Bank determines to make a payment by electronic or other means determined under clause 6.9(a)(ii) or 6.9(a)(iii) and an account is not
nominated by the Holder or joint Holder, the Bank may hold the amount payable in a separate account of the Bank until the Holder or a joint
Holder nominates an account, without any obligation to pay interest to such Holder, and the amount so held is to be taken as having been paid to
the Holder or joint Holders at the time it is credited to that separate account of the Bank.
(d)All amounts payable but unclaimed may be invested by the Bank as it determines for the benefit of the Bank until claimed or until required to be
dealt with in accordance with any law relating to unclaimed moneys.
(e)The Bank, in its absolute discretion, may withhold payment to a Holder where it is required to do so under any applicable law, including any
law prohibiting dealings with terrorist organisations or money laundering, or any other type of sanction, or where it has reasonable grounds
to suspect that the Holder may be subject to such law or sanction or involved in acts of terrorism or money laundering, and may deal with
the payment and the Holder’s BOQ CPS in accordance with that applicable law or the requirements of any relevant governmental authority or
regulatory body. The Bank is not liable for any costs or loss suffered by a Holder in exercising the Bank’s discretion under this clause 6.9(e),
even where a Holder later demonstrates that they were not subject to the applicable law or sanction.
6.10 Restrictions in the case of non-payment
Subject to clause 6.11, if for any reason a Dividend has not been paid in full on a Dividend Payment Date (Relevant Dividend Payment Date),
the Bank must not until and including the next Dividend Payment Date:
(a)declare, determine or pay any dividends or distributions on any Ordinary Shares; or
(b)buy back or reduce capital on any Ordinary Shares,
unless:
(i) the Dividend is paid in full within 3 Business Days of the Relevant Dividend Payment Date;
(ii) all BOQ CPS have been Converted or Redeemed; or
(iii)a Special Resolution of the Holders has been passed approving such action.
6.11 Exception to restrictions
The restrictions in clause 6.10 do not apply to:
(a) repurchases (including buy backs), redemptions or other acquisitions of shares of the Bank in connection with:
(i)any employment contract, employee share scheme, award rights plan, benefit plan or other similar arrangement with or for the benefit of any
one or more employees, officers, directors, consultants or contractors (including contractor’s employees) of the Bank or of any member of
the Group;
(ii)a dividend reinvestment plan, bonus option plan, bonus share plan, shareholder share purchase plan or top-up facility or shareholder sale
facility or disposal plan; or
(iii)the issue of shares in the Bank, or securities convertible into or exercisable for such shares, as consideration in an acquisition transaction
entered into before the occurrence of the failure to pay the Dividend on the relevant Dividend Payment Date;
BOQ CPS PROSPECTUS 2012
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APPENDIX A – CPS TERMS
(b)an exchange, redemption or conversion of any class or series of the Bank’s shares, or any shares of a member of the Group, for any class or
series of the Bank’s shares, or of any class or series of the Bank’s indebtedness for any class or series of the Bank’s shares;
(c)the purchase of fractional interests in shares of the Bank under the conversion or exchange provisions of the shares or the security being
converted or exchanged;
(d)any payment or declaration of a dividend in connection with any shareholders’ rights plan, or the issue of rights, shares or other property under
any shareholders’ rights plan, or the redemption or repurchase of rights pursuant to the plan; or
(e) a capital raising by way of a rights or entitlement issue made to holders of one or more capital instruments of the Bank.
For personal use only
Nothing in these Terms of Issue prohibits the Bank or any member of the Group from purchasing shares in the Bank (or an interest therein) in
connection with transactions for the account of customers of the Bank or of a Group member or, with the prior written approval of APRA, in connection
with the distribution or trading of shares in the Bank in the ordinary course of business. This includes:
(a) taking security over shares in the Bank in the ordinary course of business; and
(b)acting as trustee for another person where neither the Bank nor any member of the Group has a beneficial interest in the trust (other than a
beneficial interest that arises from a security given for the purposes of a transaction entered into in the ordinary course of business).
7.Ranking
7.1
Ranking with respect to Dividends
For payment of Dividends, the BOQ CPS rank:
(a) senior to Ordinary Shares; and
(b)equally among themselves and with BOQ PEPS and any other securities or instruments of the Bank that rank equally with the BOQ CPS in respect
of dividends or distributions; and
(c) junior to any securities or instruments of the Bank that rank senior to the BOQ CPS in respect of dividends or distributions.
7.2
Liquidation preference
In a winding-up or liquidation of the Bank, the BOQ CPS rank:
(a) senior to Ordinary Shares;
(b)equally among themselves and with BOQ PEPS and any other securities or instruments of the Bank that rank equally with the BOQ CPS in respect
of return of capital in a winding-up;
(c)junior to all the Bank’s debts and liabilities to its creditors (including depositors), both unsubordinated and subordinated, other than
indebtedness that by its terms ranks equally with, or junior to, the BOQ CPS in a winding-up; and
(d)junior to any securities or instruments of the Bank that rank senior to the BOQ CPS in respect of return of capital in a winding-up,
for payment in cash of an amount out of surplus assets equal to the Face Value plus any Dividend due but unpaid or such other amount as determined
under clause 15.9 (Liquidation Sum), and otherwise do not confer any right to participate in the surplus assets of the Bank on a winding-up.
8.Default
The Bank will only be in default under these Terms of Issue in the event of a winding-up of the Bank and such winding-up will not affect the ranking of
the BOQ CPS and amounts payable under clause 7.2.
9.
Not deposit liabilities
BOQ CPS do not represent a deposit liability of the Bank and are not protected accounts for the purposes of the depositor protection provisions of
Australian banking legislation and are not guaranteed or insured by any government, government agency or compensation scheme of Australia or any
other jurisdiction.
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BOQ CPS PROSPECTUS 2012
10.Set-off
For personal use only
10.1 Holders have no set-off
A Holder is not entitled to set-off any amounts due to a Holder in respect of BOQ CPS against any amount of any nature owed by the Holder to the Bank.
10.2 Holders have no offsetting claims
A Holder will have no offsetting rights or claims on the Bank if the Bank does not pay any Dividend.
10.3 Bank has no set-off
The Bank is not entitled to set-off any amounts of any nature due to the Bank against any amount owed by the Bank to the Holder in respect of BOQ CPS.
11. Other issues of securities
11.1 No rights to participate
Holders do not have a right, as a result of holding the BOQ CPS, to participate in issues of securities to, or capital reconstructions affecting, holders of
Ordinary Shares or other securities in the Bank’s capital.
11.2 Other issues not to vary class rights
The Bank reserves the right to issue further preference shares or other securities (whether redeemable or not) which rank senior to, equally with or
behind BOQ CPS, whether in respect of dividends (whether cumulative or not), return of capital on a winding-up or otherwise.
Such issues of preference shares or other securities do not constitute a variation or abrogation of the rights attached to the then existing BOQ CPS,
nor does any buy-back, redemption or return or distribution of capital in respect of any security or instrument other than a BOQ CPS (whether that
security or instrument ranks equally, senior or junior with BOQ CPS).
12. Voting, notice and reports
12.1Voting
Holders will not be entitled to vote at any general meeting of the Bank except that they may vote:
(a)if at the time of the meeting, a Dividend (or part of a Dividend) is due and payable but has not been paid in full by the relevant dividend payment date;
(b) on a proposal:
(i) to reduce the Bank’s share capital (other than in connection with a Redemption of BOQ CPS);
(ii) that affects rights attached to the BOQ CPS;
(iii)to wind up the Bank; or
(iv) for the disposal of the whole of the Bank’s property, business and undertaking (other than in connection with a Redemption of BOQ CPS);
(c) on a resolution to approve the terms of a buy-back agreement (other than in connection with a Redemption of BOQ CPS);
(d) during the winding-up of the Bank; and
(e)in any other circumstances in which the ASX Listing Rules require holders of preference shares to be entitled to vote,
in which case Holders will be entitled:
(f) on a show of hands, to exercise one vote;
(g) on a poll, to exercise one vote for each BOQ CPS held by them.
BOQ CPS PROSPECTUS 2012
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APPENDIX A – CPS TERMS
12.2 Notice and meetings
Holders of BOQ CPS will be entitled to:
For personal use only
(a) receive notice of and attend (but not vote, except in accordance with clause 12.1) at any general meeting of the Bank;
(b) receive all reports and audited accounts of the Bank which are sent by the Bank to holders of Ordinary Shares.
Failure by the Bank to give a Holder any notice, report or other document to which that Holder is entitled under this paragraph will not affect the validity of
any meeting (or any proceedings at any meeting), transaction or document which relates to the document which was not received by the Holder.
13. Conversion, Redemption or Transfer
13.1 Conversion, Redemption or Transfer of BOQ CPS
(a)A Holder has no right to require a Conversion, Redemption or Transfer of BOQ CPS and the Bank is not obliged to Convert, Redeem or arrange a
Transfer of the BOQ CPS in any circumstances other than as set out in these Terms of Issue.
(b) Subject to these Terms of Issue, BOQ CPS will mandatorily Convert to Ordinary Shares:
(i) on a Mandatory Conversion Date in accordance with clause 13.5; or
(ii) following a Capital Trigger Event, Non-Viability Trigger Event or Acquisition Event in accordance with clause 13.5.
(c) Subject to these Terms of Issue, the Bank may Convert the BOQ CPS:
(i) following the occurrence of a Tax Event or Regulatory Event in accordance with clause 13.6 or 13.7;
(ii) on the Optional Conversion/Redemption Date in accordance with clause 13.6 or 13.7; or
(iii)following a Potential Acquisition Event in accordance with clause 13.6 or 13.7.
(d) Subject to these Terms of Issue, the Bank may Redeem or Transfer the BOQ CPS:
(i) following the occurrence of a Tax Event or Regulatory Event in accordance with clause 13.6; or
(ii) on the Optional Conversion/Redemption Date in accordance with clause 13.6.
13.2 Conversion Conditions
(a) Where indicated in these Terms of Issue, Conversion is subject to the satisfaction of the Conversion Conditions, which are that:
(i)the Test Conversion Number on the 25th Business Day before the Relevant Date is no greater than 90% of the Maximum Conversion Number
(First Conversion Condition);
(ii)the Conversion Number calculated under clause 15.2(a) (and to avoid doubt, disregarding clause 15.2 (b)) on the Relevant Date is no greater
than the Maximum Conversion Number (Second Conversion Condition); and
(iii) no Delisting Event applies in respect of the Relevant Date (Third Conversion Condition).
(b)
Relevant Date means:
(i)for a mandatory Conversion in respect of a Mandatory Conversion Date, the relevant Mandatory Conversion Date contemplated in clause 13.5(c);
(ii) for a mandatory Conversion in respect of an Acquisition Event, the Acquisition Event Conversion Date; or
(iii)for a Conversion the subject of an Early Conversion/Redemption Notice, the relevant Conversion Date notified in the Early Conversion/
Redemption Notice under clause 13.6(g).
13.3 Test Conversion Number and Maximum Conversion Number
(a)The Test Conversion Number means the Conversion Number calculated under clause 15.2(a) (and to avoid doubt, disregarding clause 15.2(b))
using the Test Reference Period and assuming that:
(i)for a mandatory Conversion in respect of a Mandatory Conversion Date or Acquisition Event, the Relevant Date is the Mandatory Conversion
Date or Acquisition Event Conversion Date; and
(ii)for a Conversion the subject of an Early Conversion/Redemption Notice, the Relevant Date is the Conversion Date notified in the Early
Conversion/Redemption Notice under clause 13.6(g).
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BOQ CPS PROSPECTUS 2012
(b)Subject to any adjustments under clauses 15.4 to 15.6, the Maximum Conversion Number is equal to the number of Ordinary Shares
calculated (to four decimal places) using the following formula:
For personal use only
Maximum Conversion Number =
Face Value
Relevant Fraction x Pre - Issue VWAP
where:
Pre-Issue VWAP means the VWAP during the period of 20 Business Days on which Ordinary Shares were traded on ASX immediately preceding, but
not including, the Issue Date;
Relevant Fraction means:
(i) if Conversion is occurring before 1 January 2013 or on a Mandatory Conversion Date, 0.5; or
(ii) if Conversion is occurring at any other time, 0.2.
13.4 Announcement of Maximum Conversion Number
The Bank must make an announcement to ASX to notify Holders of the Maximum Conversion Number within a reasonable period after the Issue Date.
13.5 Mandatory Conversion
(a)Subject to this clause 13.5 and clauses 13.6, 13.7, 13.8 and 13.9, on the earlier of the Mandatory Conversion Date, the Capital Trigger Event
Conversion Date (if any), the Non-Viability Conversion Date (if any) and the Acquisition Event Conversion Date (if any), the Bank must Convert
all BOQ CPS on issue at that date into Ordinary Shares under clause 15.
(b)The Bank will make an announcement to ASX and notify APRA in writing immediately after becoming aware of a Capital Trigger Event, NonViability Trigger Event or Acquisition Event occurring.
(c) Subject to clause 13.8, the Mandatory Conversion Date will be the first of the following dates:
(i) 15 April 2020 (Scheduled Mandatory Conversion Date);
(ii) a Dividend Payment Date after the Scheduled Mandatory Conversion Date,
on which date the Conversion Conditions are satisfied.
(d)If, on any Relevant Date for a mandatory Conversion in respect of a Mandatory Conversion Date, the First Conversion Condition is not satisfied,
the Bank will make an announcement to ASX not less than 21 Business Days before the Relevant Date notifying Holders that mandatory
Conversion will not proceed on the Relevant Date.
(e)The Capital Trigger Event Conversion Date will be the date the Capital Trigger Event occurs.
(f) Conversion on the Capital Trigger Event Conversion Date will not be subject to the Conversion Conditions.
(g)The Non-Viability Conversion Date will be the date the Non-Viability Trigger Event occurs.
(h) Conversion on the Non-Viability Conversion Date will not be subject to the Conversion Conditions.
(i)Subject to any relevant determination by APRA, the number of BOQ CPS that are required to be Converted in respect of a Capital Trigger Event or
Non-Viability Trigger Event is the number that the Bank or APRA is satisfied will be required for the Bank to cease to be subject to the Capital Trigger
Event or Non-Viability Trigger Event (as the case may be), as determined by Conversion of the BOQ CPS on a pro rata basis with the conversion or
write-off in accordance with their terms of all other Relevant Tier 1 Capital Instruments (on a Level 1 or Level 2 basis as applicable).
(j)If only some of the BOQ CPS are to be Converted in respect of a Capital Trigger Event or Non-Viability Trigger Event, the Bank may determine
which BOQ CPS are Converted. In making that determination, the Bank must endeavour to treat Holders on an approximately proportionate basis,
but may discriminate to take account of the effect on marketable parcels and other logistical considerations.
(k) On a Capital Trigger Event Conversion Date or Non-Viability Conversion Date, subject to clauses 13.8(d) and 15.9:
(i) the BOQ CPS or relevant number of BOQ CPS will Convert, or be treated as having been Converted; and
(ii)the entry of the corresponding BOQ CPS, or relevant number of BOQ CPS, in each Holder’s holding in the register of BOQ CPS will constitute
a record of the holding of that Holder to the Conversion Number of Ordinary Shares (and, if applicable, any remaining balance of BOQ CPS),
and the Bank will recognise the Holder as having been issued the relevant Ordinary Shares for all purposes, in each case without the need for
any further act or step by the Bank or the Holder or any other person,
and the Bank will, as soon as practicable thereafter and without delay on the part of the Bank, take any appropriate procedural steps to record
such Conversion, including updating the registers of BOQ CPS and Ordinary Shares.
BOQ CPS PROSPECTUS 2012
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APPENDIX A – CPS TERMS
(l)The Acquisition Event Conversion Date will be the Business Day before the date reasonably determined by the Bank to be the last date on
which holders of Ordinary Shares can participate in the bid or scheme concerned or such earlier date as the Bank may reasonably determine
having regard to the timing for implementation of the bid or scheme concerned or such later date as APRA may require.
For personal use only
(m) Conversion on the Acquisition Event Conversion Date is subject to the Conversion Conditions.
13.6 Early Conversion, Redemption or Transfer
(a) Subject to APRA’s prior written approval, the Bank may serve an Early Conversion/Redemption Notice:
(i) in respect of some or all of the BOQ CPS, following the occurrence of a Tax Event or Regulatory Event;
(ii) in respect of all (but not some only) of the BOQ CPS, following the occurrence of a Potential Acquisition Event; and
(iii)in respect of some or all of the BOQ CPS, in respect of the Optional Conversion/Redemption Date.
(b)The Bank must notify Holders of the occurrence of a Potential Acquisition Event by announcement to ASX as soon as practicable after becoming
aware of the occurrence of that event.
(c)If the Bank serves an Early Conversion/Redemption Notice, the Bank must include in that notice which, or which combination, of the following it
intends to do in respect of BOQ CPS the subject of the notice:
(i) Convert BOQ CPS into Ordinary Shares under clause 15; or
(ii)Redeem BOQ CPS in accordance with clause 14 on the relevant Redemption Date, in which case the Early Conversion/Redemption Notice
must also specify the intended type of Redemption under clause 14.1; or
(iii)Transfer BOQ CPS in accordance with clause 16 on the relevant Transfer Date.
(d) The Bank may only apply the mechanisms in clause 13.6(c) if APRA has given its prior written approval to such mechanisms being applied.
Holders should not expect that APRA’s prior written approval will be given.
(e) The Bank:
(i) may only apply the mechanism in clause 13.6(c)(i) (Conversion) if the Conversion Conditions are satisfied;
(ii) must not apply the mechanism in clause 13.6(c)(ii) (Redemption) or 13.6(c)(iii) (Transfer) in respect of a Potential Acquisition Event; and
(iii) may only apply the mechanism in clause 13.6(c)(ii) (Redemption) if APRA is satisfied that either:
A.BOQ CPS the subject of the Redemption are replaced concurrently or beforehand with Tier 1 Capital of the same or better quality and the
replacement of the instrument is done under conditions that are sustainable for the Bank’s income capacity; or
B. the Group’s capital position is well above its minimum capital requirements after the Bank elects to Redeem the BOQ CPS.
(f)An Early Conversion/Redemption Notice cannot be given in the period of 20 Business Days preceding (but not including) a Relevant Date for
a mandatory Conversion in respect of a Mandatory Conversion Date where the First Conversion Condition has been met in respect of that Relevant Date.
(g)If the Bank serves an Early Conversion/Redemption Notice under clause 13.6, the Conversion Date, Redemption Date or Transfer Date (as appropriate)
is the date stated in the Early Conversion/Redemption Notice provided that:
(i)the Conversion Date, Redemption Date or Transfer Date (as applicable) in the case of a notice under clause 13.6(a)(i), is the last Business Day
of the month following the month in which the Early Conversion/Redemption Notice is given by the Bank unless the Bank determines an earlier
Conversion Date, having regard to the best interests of the Holders as a whole and the relevant event;
(ii)the Conversion Date in the case of a notice under clause 13.6(a)(ii), is the Business Day before the date reasonably determined by the Bank to be
the last date on which holders of Ordinary Shares can participate in the bid or scheme concerned or such earlier date as the Bank may reasonably
determine having regard to the timing for implementation of the bid or scheme concerned or such later date as APRA may require (Potential
Acquisition Event Conversion Date); and
(iii)the Conversion Date, Redemption Date or Transfer Date (as applicable) in the case of a notice under clause 13.6(a)(iii), is the Optional
Conversion/Redemption Date, which must fall:
A. no earlier than:
1) 25 Business Days, where Conversion is proposed; or
2) 15 Business Days, where Redemption or Transfer is proposed; and
111
B. no later than 50 Business Days,
after the date of the Early Conversion/Redemption Notice.
BOQ CPS PROSPECTUS 2012
For personal use only
(h)If the Bank serves an Early Conversion/Redemption Notice to Convert, Redeem or Transfer only some BOQ CPS, the Bank must endeavour to treat
Holders on an approximately proportionate basis, but may discriminate to take account of the effect on marketable parcels and other logistical
considerations.
13.7 If Conversion Conditions are not satisfied
If any of the Conversion Conditions is not satisfied in respect of the Relevant Date for a Conversion under clause 13.5 (in respect of an Acquisition
Event only) or under clause 13.6:
(a)if the First Conversion Condition is not satisfied, the Bank will make an announcement to ASX not less than 21 Business Days before the Relevant
Date (or in the case of a Conversion in respect of an Acquisition Event or Potential Acquisition Event, the later of 21 Business Days and as early
as practicable before the Relevant Date) notifying Holders that the Conversion will not proceed on the Relevant Date;
(b)if the First Conversion Condition is satisfied but either of the Second Conversion Condition or Third Conversion Condition is not satisfied, the
Bank will make an announcement to ASX as soon as practicable that the Conversion will not (or, as the case may be, did not) proceed on the
Relevant Date; and
(c) notwithstanding clauses 13.2(b), 13.5(l) and 13.6:
(i)the relevant Conversion Date will be deferred until the first Dividend Payment Date on which the Conversion Conditions would be satisfied if
that Dividend Payment Date were a Relevant Date for the purposes of clause 13.2 (Deferred Conversion Date);
(ii)the Bank must Convert the BOQ CPS on the Deferred Conversion Date, unless those BOQ CPS have been earlier Converted or Redeemed in
accordance with these Terms of Issue;
(iii)until the Deferred Conversion Date, all rights attaching to the BOQ CPS will continue as if the relevant Acquisition Event Conversion Date had
not occurred or the relevant Early Conversion/Redemption Notice had not been given;
(iv)if the First Conversion Condition would not be satisfied on a Dividend Payment Date if that Dividend Payment Date were a Relevant Date for
the purposes of clause 13.2, and as a result the Dividend Payment Date is not a Deferred Conversion Date, clause 13.7(a) will apply as if the
Dividend Payment Date were a Relevant Date for the purposes of clause 13.7(a); and
(v)if the First Conversion Condition is satisfied on a Dividend Payment Date under clause 13.7(c)(iv) but either of the Second Conversion
Condition or Third Conversion Condition would not be satisfied if that Dividend Payment Date were a Relevant Date for the purposes of
clause 13.2, and as a result the Dividend Payment Date is not a Deferred Conversion Date, the Bank will make an announcement to ASX as
soon as practicable that the Conversion will not (or, as the case may be, did not) proceed on that Dividend Payment Date.
To avoid doubt, this clause 13.7 does not apply to a Conversion in respect of a Mandatory Conversion Date, Capital Trigger Event Conversion Date or
Non-Viability Conversion Date under clause 13.5.
13.8 Priority of Conversion, Redemption, Transfer, Write Off and Winding up
(a)Subject to clause 13.7 and this clause 13.8, an Early Conversion/Redemption Notice given by the Bank under clause 13.6 is irrevocable and may
include any other information that the Bank considers necessary or appropriate to effect the Conversion, Redemption or Transfer in an orderly manner.
(b)On the occurrence of a Capital Trigger Event or Non-Viability Trigger Event, any Early Conversion/Redemption Notice then on issue will
immediately become void.
(c) Subject to clauses 13.8(d) and 15.9, Conversion required on account of:
(i)a Capital Trigger Event takes place on the date and in the manner required by clause 13.5, notwithstanding any other provision for
Conversion, Redemption or Transfer in these Terms of Issue (other than on account of a Non-Viability Trigger); and
(ii)a Non-Viability Trigger Event takes place on the date and in the manner required by clause 13.5, notwithstanding any other provision for
Conversion, Redemption or Transfer in these Terms of Issue.
(d)If on the Capital Trigger Event Conversion Date or Non-Viability Conversion Date an Inability Event subsists, then to the extent such event
prevents the Bank from Converting BOQ CPS, Conversion on account of the Capital Trigger Event or Non-Viability Trigger Event will not occur
and clause 15.9 shall apply.
(e)If before Conversion an order is made by a court, or an effective resolution is passed, for the winding-up of the Bank, then Conversion will not
occur and clause 7.2 shall apply, except where Conversion is required in respect of a Capital Trigger Event or Non-Viability Trigger Event in which
case Conversion will proceed in accordance with clause 13.5 subject to clause 15.9.
BOQ CPS PROSPECTUS 2012
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APPENDIX A – CPS TERMS
13.9 Issue of ordinary shares of an Approved NOHC
For personal use only
Where there is a replacement of the Bank as the ultimate holding company of the Group and the successor holding company is an Approved NOHC, no
Acquisition Event or Potential Acquisition Event will occur and no Conversion of the BOQ CPS will be triggered as a consequence of the Replacement.
Instead, these Terms of Issue will be amended as required for the substitution of the Approved NOHC in accordance with clause 18.4.
13.10Takeovers and schemes of arrangement
If:
(a) a takeover bid is made for Ordinary Shares, acceptance of which is recommended by the Directors; or
(b)the Directors recommend a scheme of arrangement in respect of the Ordinary Shares of the Bank which will result in a person other than the Bank
having a relevant interest in more than 50% of the Ordinary Shares,
in each case which would result in an Acquisition Event then, if the Directors consider that the Bank will not be permitted to elect to Convert the
BOQ CPS in accordance with clause 13.6, or the Second Conversion Condition or Third Conversion Condition will not be satisfied in respect of the
Conversion Date relating to an Acquisition Event in accordance with clause 13.7, the Directors will use all reasonable endeavours to procure that:
(c) takeover offers are made to Holders which, in respect of each BOQ CPS, are for a consideration at least equal to the Redemption Price of that
BOQ CPS; or
(d) Holders are entitled to participate in the scheme of arrangement or a similar transaction.
14. Mechanics of Redemption
14.1 Meaning of Redemption
Redemption, in respect of a BOQ CPS, means the BOQ CPS is redeemed, bought back (other than by an on-market buy-back) or cancelled pursuant to
a reduction of capital (or any combination of these) for an amount of cash equal to the Redemption Price, as the case may be. Subject to APRA’s prior
written approval of the Redemption, if the Bank elects to Redeem BOQ CPS, the provisions of this clause 14 apply.
14.2 Effect of Early Conversion/Redemption Notice
Once a Holder has been given an Early Conversion/Redemption Notice that notifies an intention to Redeem any or all of a Holder’s BOQ CPS, that
Holder must not deal with, transfer, dispose of or otherwise encumber the BOQ CPS the subject of the proposed Redemption and must do all things
reasonably required to give effect to the Redemption of the relevant BOQ CPS in accordance with these Terms of Issue.
14.3 Redemption of BOQ CPS
If the Bank determines to Redeem any BOQ CPS by redemption, to effect the Redemption of the BOQ CPS specified in the Early Conversion/
Redemption Notice, the Bank shall pay the Redemption Price to the relevant Holders on the relevant Redemption Date. Upon payment of the
Redemption Price, all other rights conferred, or restrictions imposed, by those BOQ CPS under these Terms of Issue will no longer have effect.
14.4 Buy-back of BOQ CPS
If the Bank determines to Redeem any BOQ CPS by buy-back, each Holder agrees to accept the buy-back offer for their relevant BOQ CPS to which the
Early Conversion/Redemption Notice relates and will be deemed to have sold to the Bank those BOQ CPS free of all Encumbrances on the terms of the
Buy-Back Agreement.
113
For the avoidance of doubt, no agreement arises under this clause 14.4 until the later of:
(a) the date the Early Conversion/Redemption Notice is sent to Holders; and
(b)the date all relevant consents (if any) to the buy-back have been obtained from the Bank’s shareholders or any regulatory authority or other
person, pursuant to, and in the manner required by, any applicable law or the ASX Listing Rules (subject to any applicable modifications and
waivers of such laws or ASX Listing Rules); and
(c)immediately after payment of the final Dividend to be paid as may be determined by the Directors in their absolute discretion and identified in the
Early Conversion/Redemption Notice.
BOQ CPS PROSPECTUS 2012
14.5 Cancellation of BOQ CPS
If the Bank:
(a) determines to Redeem any BOQ CPS by cancellation;
(b)obtains all consents (if any) to the cancellation which are required to be obtained from the Bank’s shareholders or any regulatory authority or
other person, pursuant to and in the manner required by any applicable law or the ASX Listing Rules; and
(c)gives an Early Conversion/Redemption Notice to the relevant Holders notifying them of the Bank’s determination to cancel the BOQ CPS identified in
the Early Conversion/Redemption Notice,
For personal use only
then subject to these Terms of Issue, the Bank will, on the relevant Redemption Date, cancel every BOQ CPS that the Bank has determined to cancel and
identified in the Early Conversion/Redemption Notice. For each BOQ CPS that is cancelled, an amount equal to the Redemption Price will be paid by the
Bank to the relevant Holders on the relevant Redemption Date in respect of the cancellation.
14.6 Further assurances
If required by the Bank, where the Terms of Issue provide that the Bank is entitled to Redeem any BOQ CPS, including a Redemption by buy-back or
cancellation, the Holder must to the extent permitted by law:
(a)vote in favour (subject to compliance with the law and to the extent the Holder is entitled to do so) or otherwise abstain from any required resolution;
(b) provide all documentation and execute or provide any authorisation or power necessary; and
(c) take all other action necessary or desirable,
to effect the Redemption of those BOQ CPS.
14.7 Power of attorney and agency
Each Holder irrevocably:
(a)appoints the Bank, each of its authorised officers and any liquidator, administrator or statutory manager of the Bank (each Relevant Person)
severally to be the attorney of the Holder and the agent of the Holder with power in the name and on behalf of the Holder to do all such acts and
things including by exercising any voting rights attached to the BOQ CPS held by the Holder and signing all documents and transfers as may, in
the opinion of the Relevant Person, be necessary or desirable to be done in order for the Holder to observe or perform the Holder’s obligations
under these Terms of Issue, including:
(i)to effect, record or perfect the Transfer or Redemption (or transactions contemplated by the Transfer or Redemption) of the BOQ CPS held by
the Holder when required or permitted in accordance with these Terms of Issue;
(ii)acting as the agent and/or attorney of each Holder to facilitate the buy back or cancellation of the BOQ CPS held by the Holder under clause
14.4 or 14.5; or
(iii) as otherwise contemplated under these Terms of Issue; and
(b)authorises and directs the Bank to make such entries in the register of BOQ CPS (including any amendments and additions to the register) which
the Bank considers necessary or desirable to record the Transfer or Redemption of the BOQ CPS in accordance with these Terms of Issue and to
record the cessation of the Holder’s registration as the holder of the BOQ CPS upon such Transfer or Redemption.
The power of attorney and agency appointment given in this clause is irrevocable and given for valuable consideration to secure the performance by
the Holder of its obligations under these Terms of Issue.
15. Mechanics of Conversion
15.1 Meaning of Conversion
A BOQ CPS, on any Conversion, confers all of the rights attaching to one Ordinary Share but these rights do not take effect until 5.00pm (Brisbane
time) on the date of Conversion. At that time:
(a)all other rights or restrictions conferred on BOQ CPS under these Terms of Issue will no longer have any effect (except for any rights relating to a
Dividend payable on or before the Conversion Date and any rights to any allotment of additional Ordinary Shares to be issued upon Conversion
under clause 15.2); and
(b)the Ordinary Share resulting from Conversion will rank equally with all other Ordinary Shares then on issue and the Bank will issue a statement
that the holder of those shares holds a share so ranking.
The variation of the status of, and the rights attaching to, a BOQ CPS under this clause 15.1 and any issue of additional Ordinary Shares under clause
15.2 is, for the purposes of these Terms of Issue, together termed ‘Conversion’. Conversion does not constitute redemption, buy-back, cancellation or
termination of a BOQ CPS or an issue, allotment or creation of a new share (other than the additional Ordinary Shares issued under clause 15.2).
BOQ CPS PROSPECTUS 2012
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APPENDIX A – CPS TERMS
15.2 Effect of Conversion
(a) On the Conversion Date in respect of any Conversion:
For personal use only
(i) each BOQ CPS being Converted will Convert into one Ordinary Share; and
(ii)subject to this clause 15.2, each Holder will be issued an additional number of Ordinary Shares for each BOQ CPS being Converted equal to
one less than the following number calculated to four decimal places:
=
Face Value
Pre - Conversion VWAP x (1 - Discount Factor)
where:
Discount Factor (expressed as a decimal) means 0.01;
Pre-Conversion VWAP means the VWAP during the Pre-Conversion VWAP Period (provided that if for a Conversion in respect of an
Acquisition Event or Potential Acquisition Event there is no trading in Ordinary Shares after the Acquisition Event or Potential Acquisition Event
(as the case may be), the Pre-Conversion VWAP will be the offer price for Ordinary Shares under the relevant Acquisition Event or Potential
Acquisition Event).
(iii)
Pre-Conversion VWAP Period means:
A.for the Test Conversion Number, the period of trading in the Ordinary Shares on ASX on the 25th Business Day before the Relevant Date
(or if trading in Ordinary Shares did not occur on that date, the period of trading on the last Business Day before that date on which
trading in Ordinary Shares occurred) (Test Reference Period);
B. for Conversion in respect of an Acquisition Event or Potential Acquisition Event, the lesser of:
1)the 20 Business Days on which trading in the Ordinary Shares took place immediately preceding, but not including, the relevant
Conversion Date; and
2)the number of Business Days that Ordinary Shares are quoted for trading on ASX or the principal securities exchange on which
Ordinary Shares are then quoted, following the occurrence of the Acquisition Event or Potential Acquisition Event (as the case may
be) and preceding, but not including, the relevant Conversion Date;
C.for Conversion in respect of a Capital Trigger Event or Non-Viability Trigger Event, the period of 5 Business Days on which trading in the
Ordinary Shares took place immediately preceding, but not including, the date of the Capital Trigger Event or Non-Viability Event, as the
case may be;
D.in all other cases, the period of 20 Business Days on which trading in the Ordinary Shares took place immediately preceding, but not
including, the relevant Conversion Date.
(b)If the number of Ordinary Shares that a Holder would be entitled to receive for each BOQ CPS calculated in accordance with clause 15.2(a) would
exceed the Maximum Conversion Number, the Holder will instead receive a number of Ordinary Shares equal to the Maximum Conversion Number
for each BOQ CPS.
15.3 Fractions on Conversion
Where the total number of Ordinary Shares that a Holder is entitled to in respect of the total number of BOQ CPS being Converted at that time includes
a fraction, that fraction will be disregarded.
15.4Adjustment to VWAP for dividends, distributions and other entitlements, and for divisions and
similar transactions
115
For the purposes of calculating VWAP in these Terms of Issue (including the Pre-Issue VWAP under clause 13.3):
(a)where, on some or all of the Business Days in the period for which VWAP is determined (VWAP Period), Ordinary Shares have been quoted on
ASX as cum dividend or cum any other distribution or entitlement and BOQ CPS will Convert into Ordinary Shares after the date those Ordinary
Shares no longer carry that dividend, distribution or entitlement, then the VWAP on the Business Days on which those Ordinary Shares have been
quoted cum dividend, cum distribution or cum entitlement shall be reduced by an amount (Cum Value) equal to in the case of:
(i)a dividend or other distribution, the amount of that dividend or distribution including, if the dividend or distribution is franked, the amount that
would be included in the assessable income of a recipient of the dividend or other distribution who is a natural person resident in Australia
under the Tax Act;
(ii)an entitlement that is not a dividend or other distribution under clause 15.4(a)(i) and which is traded on ASX on any of those Business Days,
the volume weighted average price of all such entitlements sold on ASX during the VWAP Period on the Business Days on which those
entitlements were traded; or
(iii)an entitlement that is not a dividend or other distribution under clause 15.4(a)(i) and which is not traded on ASX during the VWAP Period,
the value of the entitlement as reasonably determined by the Directors;
BOQ CPS PROSPECTUS 2012
For personal use only
(b)where, on some or all of the Business Days in the VWAP Period, Ordinary Shares have been quoted ex dividend, ex distribution or ex entitlement,
and BOQ CPS will Convert into Ordinary Shares which would be entitled to receive the relevant dividend, distribution or entitlement, the VWAP on the
Business Days on which those Ordinary Shares have been quoted ex dividend, ex distribution or ex entitlement shall be increased by the Cum Value;
and
(c)where during the relevant VWAP Period the Ordinary Shares are reconstructed, consolidated, divided or reclassified into a lesser or greater
number of securities (not involving any cash payment or other distribution to or by Ordinary Shareholders) (Reconstruction), in calculating the
VWAP for that VWAP Period the daily VWAP applicable on each day in the relevant VWAP Period which falls before the date on which trading in
Ordinary Shares is conducted on a post Reconstruction basis shall be adjusted by multiplying the daily VWAP by the following formula:
RD
RN
where:
RD means the aggregate number of Ordinary Shares immediately before the Reconstruction; and
RN means the aggregate number of Ordinary Shares immediately after the Reconstruction.
Any adjustment made by the Bank under this paragraph (c) will constitute an alteration to these Terms of Issue and will be binding on all Holders
and these Terms of Issue will be construed accordingly.
15.5 Adjustments to Maximum Conversion Number for bonus issues
(a)Subject to clauses 15.5(b) and 15.5(c), if the Bank makes a bonus issue (being a pro rata issue) of Ordinary Shares to Ordinary Shareholders
generally, the Maximum Conversion Number will be adjusted immediately under the following formula:
CN = CNo x (RD + RN)
RD
where:
CN means the Maximum Conversion Number applying immediately after the application of this formula;
CNo means the Maximum Conversion Number applying immediately before the application of this formula;
RD means the number of Ordinary Shares on issue immediately before the issue of new Ordinary Shares under the bonus issue; and
RN means the number of Ordinary Shares issued under the bonus issue;
(b)Clause 15.5(a) does not apply to Ordinary Shares issued as part of a bonus share plan, employee or executive share plan, executive option
plan, share top up plan, share purchase plan or dividend reinvestment plan.
(c)For the purpose of this clause 15.5, a bonus issue will be regarded as a pro rata issue notwithstanding that the Bank does not make the issue to some
or all Ordinary Shareholders with registered addresses outside Australia, provided that in so doing the Bank is not in contravention of the ASX
Listing Rules.
(d)No adjustments to the Maximum Conversion Number will be made under this clause 15.5 for any offer of Ordinary Shares not covered by
clause 15.5(a), including a rights issue or other essentially pro rata issue.
(e)The fact that no adjustment is made for an issue of Ordinary Shares other than as covered by clause 15.5(a) shall not in any way restrict
the Bank from issuing Ordinary Shares on terms as it sees fit nor be taken to constitute a modification or variation of rights or privileges of
Holders otherwise requiring any consent or concurrence.
15.6 Adjustments to Maximum Conversion Number for divisions and similar transactions
Where the Ordinary Shares are the subject of a Reconstruction, the Maximum Conversion Number shall be adjusted in the same ratio in which the
Ordinary Shares have been Reconstructed.
15.7 Announcement of adjustments
The Bank will make an announcement to ASX of any adjustment to the VWAP or Maximum Conversion Number under this clause 15 within 10
Business Days after determining the adjustment and the adjustment will be final and binding.
BOQ CPS PROSPECTUS 2012
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APPENDIX A – CPS TERMS
15.8 Foreign Holders
For personal use only
Where BOQ CPS held by a Foreign Holder are to be Converted, unless the Bank is satisfied that the laws of the Foreign Holder’s country of residence
permit the issue of Ordinary Shares to the Foreign Holder (but as to which the Bank is not bound to enquire), either unconditionally or after
compliance with conditions which the Bank in its absolute discretion regards as acceptable and not unduly onerous, the Ordinary Shares which the
Foreign Holder is obliged to accept will be issued to a nominee who will sell those Ordinary Shares and pay a cash amount equal to the net proceeds
received, after deducting any applicable brokerage, stamp duty and other taxes and charges, to the Foreign Holder accordingly. The nominee must be
independent of the Bank and not be an entity controlled (as defined by the Corporations Act) by the Bank.
15.9 Write Off
Where on the Capital Trigger Event Conversion Date or Non-Viability Conversion Date, as applicable, an Inability Event subsists and Conversion has
not been effected within five days after the Capital Trigger Event Conversion Date or the Non-Viability Conversion Date (as the case may be), to the
extent such Inability Event prevents the Bank from Converting BOQ CPS which would otherwise be Converted, those BOQ CPS will be Written Off.
In this clause 15.9, Written Off means that, in respect of a BOQ CPS and a Capital Trigger Event Conversion Date or a Non-Viability Conversion Date:
(a)the BOQ CPS will not be Converted on that date and will not be Converted, Redeemed or Transferred under these Terms of Issue on any
subsequent date;
(b)on and from the sixth day after the Capital Trigger Event Conversion Date or the Non-Viability Conversion Date (as the case may be), without the
need for Holder or Ordinary Shareholder approval:
(i)in a winding-up of the Bank, the Liquidation Sum is the sum which would have been paid in respect of the BOQ CPS out of the surplus
available to shareholders in the winding-up if the BOQ CPS were the Conversion Number of Ordinary Shares (and such sum will be treated
as the amount paid up on the BOQ CPS); and
(ii)subject to clauses 6.5, 6.6 and 6.8, a non-cumulative dividend is payable in respect of the BOQ CPS if and when a dividend is paid on
Ordinary Shares, in an amount determined as if the BOQ CPS were a number of Ordinary Shares equal to the Conversion Number,
in each case with that Conversion Number being finally determined as if those BOQ CPS had Converted on the Capital Trigger Event Conversion Date
or the Non-Viability Conversion Date (as the case may be) (and subject always to such number not exceeding the Maximum Conversion Number);
and
(c)on and from the sixth day after the Capital Trigger Event Conversion Date or the Non-Viability Conversion Date (as the case may be), clauses
4, 6.1, 6.2, 6.3, 6.4, 6.10 (and consequentially 6.11), 13 (other than clause 13.8(d)), 14, 15 (other than this clause 15.9 and any provisions in
clause 15 required to give effect to this clause 15.9), 16, 18.4 and 18.5 will no longer apply to those BOQ CPS.
16. Mechanics of Transfer
16.1 Transfer process
117
(a) If the Bank elects to Transfer BOQ CPS under clause 13.6(c)(iii), the provisions of this clause 16 apply in respect of those BOQ CPS.
(b)The Bank must appoint one or more third parties selected in its absolute discretion (Nominated Transferee) to acquire the BOQ CPS for cash
for the amount of the Face Value per BOQ CPS and otherwise on such terms as may be agreed between the Bank and the Nominated Transferees.
If the Bank appoints more than one Nominated Transferee in respect of a Transfer, all or any of the BOQ CPS held by a Holder which are being
Transferred may be purchased by any one or any combination of the Nominated Transferees, as determined by the Bank.
(c)An Early Conversion/Redemption Notice given in accordance with clause 13.6(c)(iii) shall bind Holders in accordance with its terms, including as an
irrevocable offer to Transfer BOQ CPS the subject of the notice to the Nominated Transferees on the Transfer Date for the price in clause 16.1(b).
(d)On the Transfer Date, subject to payment by the relevant Nominated Transferee of the price in clause 16.1(b) to the relevant Holders, all right,
title and interest in the relevant BOQ CPS (excluding the right to any Dividend payable on that date) will be transferred to the relevant Nominated
Transferee free from Encumbrances.
BOQ CPS PROSPECTUS 2012
16.2 Nominated Transferee
For personal use only
(a) A Nominated Transferee:
(i) may not be a related entity (as defined by the APRA Guidelines) of the Bank; and
(ii) must have a long term counterparty credit rating from one of Standard & Poor’s, Moody’s or Fitch of not less than investment grade.
(b)The Bank must not appoint a Nominated Transferee if it believes in good faith that there is a more than insubstantial risk that the Nominated
Transferee will be unable (or will otherwise not be required) to fulfil its obligations under the Transfer or that the Transfer to the Nominated
Transferee would otherwise not occur.
(c)If a Nominated Transferee fails (or is otherwise not required) to fulfil its obligations under a Transfer (Defaulting Transferee), then the transfer
to the Defaulting Transferee will not occur and Holders will continue to hold their BOQ CPS referable to that Defaulting Transferee until they are
otherwise Converted, Redeemed or Transferred in accordance with these Terms of Issue.
17. Transfers of BOQ CPS
The BOQ CPS are transferable at the Holder’s option in accordance with the Constitution and Corporations Act and, if they are quoted on ASX, the ASX
Listing Rules, ASTC Settlement Rules and any other applicable requirements flowing from quotation.
18. Amendments to the Terms of Issue
18.1 Amendments without consent
Subject to complying with all applicable laws, the Bank may without the authority, assent or approval of Holders or Ordinary Shareholders amend or
add to these Terms of Issue if such amendment or addition is, in the opinion of the Bank:
(a) of a formal, minor or technical nature;
(b) made to cure any ambiguity or correct a manifest error;
(c)expedient for the purpose of enabling BOQ CPS to be listed or to remain listed on a securities exchange (including, without limitation, in
connection with any change in the principal securities exchange on which Ordinary Shares are listed) or lodged in a clearing system or to remain
lodged in a clearing system or to be offered for sale or for subscription under the laws for the time being in force in any place;
(d) necessary to comply with the provisions of any statute or the requirements of any regulatory authority;
(e) made in accordance with the Bank’s adjustment rights in clause 15;
(f)an amendment of any date or time period stated, required or permitted in connection with any Conversion in a manner necessary or desirable to
facilitate the Conversion; or
(g)is not likely (taken as a whole and in conjunction with all other modifications, if any, to be made contemporaneously with that modification) to be
materially prejudicial to the interests of the Holders of the BOQ CPS as a whole.
18.2 Amendment with consent
Without limiting clause 18.1, the Bank may, amend these Terms of Issue if the amendment has been approved by a Special Resolution.
18.3 Amendment with approval of APRA
Notwithstanding anything in this clause 18, the Bank must seek and obtain APRA’s written approval before making any amendment to the Terms of
Issue under this clause 18 that may affect the eligibility of the BOQ CPS to qualify as Additional Tier 1 Capital.
BOQ CPS PROSPECTUS 2012
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APPENDIX A – CPS TERMS
18.4 Amendment without consent for Approved NOHC
For personal use only
If:
(a) it is proposed that the Bank be replaced as the ultimate holding company of the Group by an Approved NOHC (Replacement); and
(b) the Approved NOHC agrees for the benefit of Holders:
(i)to deliver Approved NOHC Shares under all circumstances when the Bank would have otherwise been obliged to deliver Ordinary Shares on a
Conversion, subject to the same terms and conditions of these Terms of Issue as amended by this clause 18.4;
(ii)to comply with the restriction in clause 6.10 (with all appropriate modifications) of these Terms of Issue; and
(iii)to use all reasonable endeavours and furnish all such documents, information and undertakings as may be reasonably necessary in order
to procure quotation of the Approved NOHC Shares issued under these Terms of Issue on the stock exchanges on which the other Approved
NOHC Shares are quoted at the time of a Conversion,
the Bank may, with APRA’s prior written approval, but without the authority, assent or approval of Holders, give a notice (an Approved Replacement
Notice) to Holders (which, if given, must be given as soon as practicable before the Replacement and in any event no later than 10 Business Days
before the Replacement occurs) specifying the amendments to these Terms of Issue which will be made in accordance with this clause 18.4 to
effect the substitution of an Approved NOHC as the issuer of ordinary shares on Conversion (the Approved Replacement Terms). An Approved
Replacement Notice, once given, is irrevocable.
18.5 Effect of Approved Replacement notice
If the Bank gives an Approved Replacement Notice to Holders in accordance with clause 18.4, the Approved Replacement Terms:
(a) will have effect on and from the date specified in the Approved Replacement Notice; and
(b)may:
(i)amend the definition of Conversion in these Terms of Issue such that, with APRA’s prior written approval, on the date on which the BOQ CPS
are to be Converted:
A.each BOQ CPS that is being Converted will be automatically transferred by each Holder free from Encumbrances to the Approved NOHC (or
another member of the Group) (the Transferee) on the date the Conversion is to occur;
B.each Holder will be issued a number of Approved NOHC Shares equal to the Conversion Number (which is calculated using the formula in
clause 15.2 as though references in that clause to Ordinary Shares are references to Approved NOHC Shares); and
C. as between the Bank and the Transferee:
1) each BOQ CPS held by the Transferee as a result of the transfer will be automatically Converted into an Ordinary Share; and
2) an additional number of Ordinary Shares will be issued to the Transferee,
such that the total number of Ordinary Shares held by the Transferee by reason of sub-paragraphs 1) and 2) increases by the number
which equals the number of Approved NOHC Shares issued by the Approved NOHC to Holders on Conversion; and
(ii)make such other amendments as in the Bank’s reasonable opinion are necessary and appropriate to effect the substitution of an Approved
NOHC, including without limitation to clause 15.9, as the provider of the ordinary shares on Conversion in the manner contemplated by
these Terms of Issue.
18.6 General provisions
119
(a)Where an amendment under clause 18.4 results in Approved NOHC Shares being issued to Holders, each Holder agrees to become a member
of the Approved NOHC immediately before the issue of the Approved NOHC Shares and appoints the Bank as its attorney as contemplated under
clause 14.7 to do all things necessary or desirable to give effect to clauses 18.4 and 18.5.
(b)Nothing in clause 18.4 or 18.5 prevents the Bank from proposing, or limits, any scheme of arrangement or other similar proposal that may be put
to Holders or other members of the Bank.
BOQ CPS PROSPECTUS 2012
19. Governing law
For personal use only
These Terms of Issue are governed by the law of Queensland, Australia.
20.Interpretation
20.1Definitions
In these Terms of Issue, the following expressions have the following meanings:
Acquisition Event means:
(a)a takeover bid is made to acquire all or some Ordinary Shares and the offer is, or becomes, unconditional and the bidder has a relevant interest in
more than 50% of the Ordinary Shares on issue; or
(b)a court approves a scheme of arrangement under Part 5.1 of the Corporations Act which scheme would result in a person having a relevant
interest in more than 50% of the Ordinary Shares that will be on issue after the scheme is implemented,
and all regulatory approvals necessary for the acquisition to occur have been obtained.
Notwithstanding the foregoing, the replacement or proposed replacement of the Bank as the ultimate holding company of the Group at the initiation of
the Directors acting as a board shall not constitute an Acquisition Event if:
(c)the proposed successor holding company complies with all applicable legal requirements and obtains any necessary regulatory approvals
(including APRA’s prior written approval as a “non-operating holding company” within the meaning of the Banking Act);
(d)the proposed successor holding company agrees to take any necessary action to give effect to an amendment to the Terms of Issue as
contemplated in clauses 18.4 and 18.5;
(e) the ordinary shares of the proposed successor holding company are to be listed on an Australian stock exchange; and
(f)the proposed replacement of the Bank and the events described in paragraphs (c) to (e) would not, in the reasonable opinion of the Bank,
otherwise adversely affect the interests of Holders.
Acquisition Event Conversion Date has the meaning given in clause 13.5(l).
Additional Tier 1 Capital means that term as defined by APRA from time to time.
Administrative Action means any judicial decision, official administrative pronouncement or action, published or private ruling, interpretative
decision, regulatory procedure or policy, application of a regulatory procedure or policy and any notice or announcement (including any notice or
announcement of intent to adopt or make any of those things).
Approved NOHC means a holding company that, at the initiation of the Directors acting as a board, replaces, or is proposed to replace, the Bank as
the ultimate holding company of the Group and that satisfies the requirements under paragraphs (c) to (f) of the definition of Acquisition Event.
Approved NOHC Share means a fully paid ordinary share in the capital of the Approved NOHC.
Approved Replacement Notice has the meaning given in clause 18.4.
Approved Replacement Terms has the meaning given in clause 18.4.
APRA means the Australian Prudential Regulation Authority.
APRA Guidelines means prudential standards, guidelines, practice guides, policy statements and practice notes or other equivalent statements of
APRA which are applicable to the Bank.
ASX means the licensed market operated by ASX Limited ABN 98 008 624 691.
ASX Listing Rules means the listing rules of the ASX from time to time with any modifications or waivers applicable to the Bank.
Australian Basel III Rules means the final form of prudential rules applied by APRA resulting from the introduction of Basel III for Australian ADIs,
comprised of APRA Prudential Standards APS 001, APS 110, APS 111 and APS 222 and Reporting Standards ARS 110.0 and ARS 111.0 released by
APRA on 28 September 2012.
Bank of Queensland or the Bank means Bank of Queensland Limited ABN 32 009 656 740.
BOQ CPS PROSPECTUS 2012
120
APPENDIX A – CPS TERMS
For personal use only
Bank Bill Swap Rate means the average mid-rate for bills of a term of 180 days which average rate is displayed on Reuters page BBSW (or any page
which replaces that page) at 10:30am (Sydney time) on the relevant date, or if there is a manifest error in the calculation of that average rate or that
average rate is not displayed by 10:30am (Sydney time) on that date, or if the relevant date relates to a Dividend Period which is expected to be less
than 180 days, the rate specified by the Bank in good faith at or around that time on the relevant date having regard, to the extent possible, to:
(a)the rate otherwise bid and offered for bills of 180 days, or for funds of a tenor most closely corresponding to the period to which the rate will
apply, displayed on that page BBSW (or replacement page) at that time on the date; and
(b)if bid and offer rates for bills of a term of 180 days or of that other tenor are not otherwise available, the rates otherwise bid and offered for funds
of that tenor at or around that time on that date.
Banking Act means the Banking Act 1959 (Cth).
Bookbuild means the process conducted prior to the opening of the Offer whereby certain investors lodge bids for BOQ CPS and, on the basis of
those bids, the Bank and the joint lead managers to the Offer determine the Margin.
BOQ CPS has the meaning given in clause 1.
BOQ PEPS means the perpetual equity preference shares in the class first issued under the Constitution by the Bank in December 2007.
Business Day has the meaning given in the ASX Listing Rules.
Buy-Back Agreement means an agreement under which the Bank buys back BOQ CPS in the form contained in Schedule 1 to these Terms of Issue.
Capital Trigger Event means the ratio of the Group’s Common Equity Tier 1 Capital (or until 1 January 2013, Fundamental Tier 1 Capital) to total risk
weighted assets (each as determined by the Bank or APRA at any time) falls to, or below, 5.125%, calculated on a Level 1 or Level 2 basis.
Capital Trigger Event Conversion Date has the meaning given in clause 13.5(e).
Common Equity Tier 1 Capital means that term as defined by APRA from time to time.
Constitution means the constitution of the Bank.
Conversion has the meaning given in clause 15.1 (including the issue of additional Ordinary Shares under clause 15.2) and includes mandatory Conversion under clause 13.5 or 13.7, and Convert and Converted have a corresponding meaning.
Conversion Conditions has the meaning given in clause 13.2.
Conversion Date means the Mandatory Conversion Date, the Capital Trigger Event Conversion Date, the Non-Viability Conversion Date, the
Acquisition Event Conversion Date or, for a Conversion the subject of an Early Conversion/Redemption Notice, the date on which Conversion is to
occur as notified in the Early Conversion/Redemption Notice under clause 13.6(g), as the context requires.
Conversion Number means the aggregate of the number of Ordinary Shares into which a BOQ CPS Converts and the number of additional Ordinary
Shares which are to be issued to the holder on Conversion of a BOQ CPS, under clause 15.2.
Corporations Act means the Corporations Act 2001 (Cth).
Cum Value has the meaning given in clause 15.4(a).
Deferred Conversion Date has the meaning given in clause 13.7(c)(i).
Delisting Event means, in respect of a date, that:
(a)Ordinary Shares ceased to be listed or admitted to trading on ASX on or before that date (and where the cessation occurred before that date,
Ordinary Shares continue not to be listed or admitted to trading on that date);
(b) trading of Ordinary Shares on ASX is suspended for a period of consecutive days which includes:
(i) at least five consecutive Business Days before that date; and
(ii) that date; or
121
(c) an Inability Event subsists.
BOQ CPS PROSPECTUS 2012
Directors means the directors of the Bank.
For personal use only
Dividend has the meaning given in clause 6.1.
Dividend Payment Date means a date on which a Dividend is payable under clause 6.4 (or would be payable but for clause 6.6), whether or not a
Dividend is, or is able to be, paid on that date.
Dividend Period has the meaning given in clause 6.1.
Dividend Rate has the meaning given in clause 6.2.
Early Conversion/Redemption Notice means a notice given by the Bank to a Holder under clause 13.6 specifying that their BOQ CPS will be
Converted, Redeemed or Transferred (or a combination), as the case may be.
Encumbrance means any mortgage, pledge, charge, lien, assignment by way of security, hypothecation, security interest, title retention, preferential
right or trust arrangement, any other security agreement or security arrangement (including any security interest under the Personal Property Securities
Act 2009 (Cth)) and any other arrangement of any kind having the same effect as any of the foregoing other than liens arising by operation of law.
Face Value has the meaning given in clause 4.
First Conversion Condition has the meaning given in clause 13.2(a).
Fundamental Tier 1 Capital means that term as defined by APRA from time to time.
Foreign Holder means a Holder whose address in the register of BOQ CPS is a place outside Australia or who the Bank otherwise believes may not be
a resident of Australia.
Group means the Bank and its controlled entities, or where the context requires, refers to the Bank and such other controlled or related entities as are
required to be consolidated on a Level 1 or Level 2 basis (as applicable).
Holders means the persons whose names are for the time being registered in the register of BOQ CPS as a holder of BOQ CPS.
Inability Event means the Bank is prevented by applicable law or order of any court or action of any regulatory authority (including regarding the
insolvency, winding-up or other external administration of the Bank) or any other reason from Converting the BOQ CPS.
Issue Date means the date on which the BOQ CPS are issued.
Level 1, Level 2 and Level 3 means those terms as defined by APRA from time to time.
Liquidation Sum has the meaning given in clause 7.2.
Mandatory Conversion Date has the meaning given in clause 13.5(c).
Margin has the meaning given in clause 6.2.
Maximum Conversion Number has the meaning in clause 13.3(b).
Nominated Transferee has the meaning given in clause 16.
Non-Viability Conversion Date has the meaning given in clause 13.5(g).
Non-Viability Trigger Event means that APRA has provided a written determination to the Bank that all (or some) BOQ CPS and other Relevant
Tier 1 Capital Instruments (as specified in the determination) must be converted or written off:
(a) as without the conversion or write-off the Bank would become, in APRA’s opinion, non-viable; or
(b) as without a public sector injection of capital, or equivalent capital support, the Bank would become, in APRA’s opinion, non-viable.
Non-Innovative Residual Tier 1 Capital means that term as defined by APRA from time to time.
Offer means the invitation made under the Prospectus made by the Bank for persons to subscribe for BOQ CPS.
Optional Conversion/Redemption Date means 15 April 2018.
Ordinary Share means a fully paid ordinary share in the capital of the Bank.
BOQ CPS PROSPECTUS 2012
122
APPENDIX A – CPS TERMS
Potential Acquisition Event means:
(a)an event within paragraphs (a) or (b) of the definition of Acquisition Event occurs (without the need that all regulatory approvals necessary for the
acquisition to occur have been obtained); or
For personal use only
(b)a court orders the holding of meetings to approve a scheme of arrangement under Part 5.1 of the Corporations Act and the scheme would result in a person having a relevant interest in more than 50% of the Ordinary Shares that will be on issue after the scheme is implemented.
Notwithstanding the foregoing, the proposed replacement of the Bank as the ultimate holding company of the Group shall not constitute a Potential
Acquisition Event if the proposed replacement is an Approved NOHC.
Potential Acquisition Event Conversion Date has the meaning given in clause 13.6(g)(ii).
Pre-Conversion VWAP has the meaning given in clause 15.2.
Pre-Conversion VWAP Period has the meaning given in clause 15.2.
Pre-Issue VWAP has the meaning given in clause 13.3(b).
Prospectus means the prospectus for the Offer including these Terms of Issue.
Reconstruction has the meaning given in clause 15.4(c).
Redemption has the meaning given in clause 14.1, and Redeem and Redeemed have corresponding meanings.
Redemption Date means the date on which Redemption is to occur as notified in the Early Conversion/Redemption Notice under clause 13.6(g).
Redemption Price means in respect of Redemption by redemption or cancellation, the sum of:
(a) the Face Value; and
(b)the Dividend for the Dividend Period ended on the Redemption Date if the Directors determine to pay such a Dividend in accordance with these
Terms of Issue.
Regulatory Event means:
(a) receipt by the Bank of advice from a reputable legal counsel to the effect that, as a result of:
(i) any amendment to, clarification of, or change in, the laws or regulations of Australia; or
(ii) any Administrative Action or any amendment to, clarification of, or change in an Administrative Action,
in each case, by any legislative body, court, governmental authority or regulatory body (irrespective of the manner in which such amendment,
clarification, change or Administrative Action is made known), which amendment, clarification, change or Administrative Action is effective or
Administrative Action is announced on or after the Issue Date:
(iii)additional requirements would be imposed on the Bank in relation to the BOQ CPS; or
(iv) there would be a negative impact on the Bank which is prejudicial to the interests of the Bank,
which were not expected by the Bank before the Issue Date and that the Bank reasonably determines to be unacceptable; or
(b)the determination by the Bank, following receipt of a notice from APRA to that effect, that all of the BOQ CPS will not be included (in whole or in
part) in the Bank’s Non-Innovative Residual Tier 1 Capital, or Additional Tier 1 Capital, on a Level 1 or Level 2 basis (except where the non-inclusion
results by reason only of any applicable limitation on the amount or composition of the Bank’s Tier 1 Capital on a Level 1 or Level 2 basis which is in
effect on the Issue Date or is proposed to arise on or from a given date under APRA’s Australian Basel III Rules as at the Issue Date).
Relevant Date has the meaning given in clause 13.2(b).
Relevant Fraction has the meaning given in clause 13.3(b).
Relevant Tier 1 Capital Instruments means Tier 1 Capital instruments (including BOQ CPS) that, in accordance with their terms or by operation of
law, are capable of being converted or written off where a Capital Trigger Event or Non-Viability Trigger Event (as may be the case) occurs.
Replacement has the meaning given in clause 18.4.
123
Scheduled Mandatory Conversion Date has the meaning given in clause 13.5(c).
Second Conversion Condition has the meaning given in clause 13.2(a).
BOQ CPS PROSPECTUS 2012
Special Resolution means:
(a)a resolution passed at a meeting of Holders by a majority of at least 75% of the votes validly cast by Holders in person or by proxy and entitled to
vote on the resolution; or
For personal use only
(b) the written approval of Holders holding at least 75% of the BOQ CPS.
Tax Act means:
(a)the Income Tax Assessment Act 1936 (Cth) and the Income Tax Assessment Act 1997 (Cth) (as the case may be and a reference to any section of
the Income Tax Assessment Act 1936 includes a reference to that section as rewritten in the Income Tax Assessment Act 1997), or any act which
replaces either of them;
(b) any other law setting the rate of income tax payable; and
(c) any regulation made under such laws.
Tax Event means:
(a)any amendment to, clarification of, or change (including any announced prospective change), in the laws or treaties (or any regulations made
under such laws or treaties) of any jurisdiction or any political subdivision or taxing authority of the jurisdiction;
(b) any Administrative Action or any amendment to, clarification of, or change in, an Administrative Action,
in each case, by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in which such amendment,
clarification, change or Administrative Action is made known, which amendment, clarification, change or Administrative Action is effective, or which
Administrative Action is announced, on or after the Issue Date (and was not expected by the Bank before the Issue Date), where the Bank has received
an opinion from a reputable legal counsel or other reputable tax adviser experienced in such matters to the effect that, as a result of such amendment,
clarification, change or Administration Action (or amendment, clarification or change in respect of an Administrative Action), there is more than an
insubstantial risk (and that risk is materially greater than it was at the Issue Date) that:
(c) the Group would be exposed to a more than de minimis increase in costs in relation to the BOQ CPS; or
(d)there would be more than a de minimis increase in the taxes, duties or government charges imposed on the Group in respect of or resulting from
the BOQ CPS; or
(e)BOQ CPS would not be treated as equity interests for Australian taxation purposes or any Dividend would not be a frankable distribution within
the meaning of Division 202 of the Tax Act or franking debits would be posted to the Bank’s franking account.
Terms of Issue means these terms of issue for the BOQ CPS, including the Schedule.
Test Conversion Number has the meaning given in clause 13.3(a).
Test Reference Period has the meaning given in clause 15.2(a).
Third Conversion Condition has the meaning given in clause 13.2(a).
Tier 1 Capital means the tier 1 capital of the Group (on a Level 1 basis) or the Group (on a Level 2 basis or, if applicable, a Level 3 basis) as defined
by APRA from time to time.
Transfer means a sale of the BOQ CPS under clause 16 following the giving of an Early Conversion/Redemption Notice under clause 13.6(c)(iii), and Transfer and Transferred have corresponding meanings.
Transfer Date means the date on which Transfer is to occur as notified in the Early Conversion/Redemption Notice under clause 13.6(g).
Transferee has the meaning given in clause 18.5.
VWAP means, subject to any adjustments under these Terms of Issue, the amount (expressed in dollars and cents and rounded to the nearest full cent)
that is the average of the daily volume weighted average sale prices of Ordinary Shares sold on ASX during the relevant period, but does not include
any “crossing” transacted outside the “Open Session State” or any “special crossing” transacted at any time (as those terms are defined in the ASX
Market Rules), or any overseas trades or trades pursuant to the exercise of options over Ordinary Shares.
Written Off has the meaning given in clause 15.9, and Write Off has a corresponding meaning.
BOQ CPS PROSPECTUS 2012
124
APPENDIX A – CPS TERMS
20.2Interpretation
Unless the context otherwise requires or unless otherwise specified:
For personal use only
125
(a)if there is any inconsistency between the provisions of these Terms of Issue and the Constitution then, to the maximum extent permitted by law,
the provisions of these Terms of Issue will prevail;
(b)the Directors of the Bank may exercise all powers of the Bank under these Terms of Issue as are not, by the Corporations Act or by the
Constitution, required to be exercised by the company in general meeting;
(c)notices may be given by the Bank to a Holder in the manner prescribed by the Constitution for the giving of notices to members of the Bank and
the relevant provisions of the Constitution apply with all necessary modification to notices to Holders;
(d)a reference to a clause is a reference to a clause of these Terms of Issue;
(e)if a calculation is required under these Terms of Issue, unless the contrary intention is expressed, the calculation will be rounded to four decimal
places. For the purposes of making payment to any person, any fraction of a cent will be disregarded;
(f) definitions and interpretation under the Constitution will also apply to these Terms of Issue subject to clause 20.2(a);
(g) a reference to a body (including APRA or any other institute, association or authority but excluding the Bank or a Holder), whether statutory or not:
(i) which ceases to exist; or
(ii) whose powers or functions are transferred to another body,
is a reference to the body which replaces it or which substantially succeeds to its powers or functions;
(h)any provisions which refer to the requirements of APRA or any other prudential regulatory requirements will apply to the Bank only if the Bank is
an entity, or the holding company of an entity, subject to regulation and supervision by APRA at the relevant time;
(i) the terms takeover bid, relevant interest and scheme of arrangement when used in these terms have the meaning given in the Corporations Act;
(j)a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments,
re-enactments or replacements of any of them;
(k)if an event under these terms, including payment of a Dividend, must occur on a stipulated day which is not a Business Day, then the stipulated
day for that event will be taken to be the next Business Day; and
(l)if the principal securities exchange on which the BOQ CPS are quoted is other than ASX, unless the context otherwise requires a reference to ASX
shall be read as a reference to that principal securities exchange and a reference to the ASX Listing Rules or any term defined in any such rules,
shall be read as a reference to the corresponding rules of that exchange or corresponding defined term in such rules (as the case may be).
BOQ CPS PROSPECTUS 2012
Schedule 1
For personal use only
BOQ CPS Buy-Back Agreement
Bank of Queensland Limited
(ABN 32 009 656 740)
1.
Effective date
(a) This agreement is entered into between the Bank and the Holders and shall come into force and effect upon the later of:
(i) the date the Early Conversion/Redemption Notice is sent to the relevant Holders from whom the Bank has determined to buy back BOQ CPS;
(ii)the date all relevant consents (if any) to the Buy-Back have been obtained from the Bank’s shareholders or any regulatory authority or other
person, pursuant to, and in the manner required by, any applicable law or the ASX Listing Rules (subject to any applicable modifications and
waivers of such laws or ASX Listing Rules); and
(iii)immediately after payment of the final Dividend to be paid as may be determined by the Directors in their absolute discretion and identified in
the Early Conversion/Redemption Notice.
(b)The terms and conditions set out in this agreement are of no force and effect unless and until this agreement has become effective under clause 1(a).
2.Buy-Back
Each Holder agrees to sell to the Buyer the Buy-Back Shares free of all Encumbrances on the terms set out in this agreement.
3.
Buy-Back Price
The Buyer will pay the Buy-Back Price for each Buy-Back Share bought back from a Holder under this agreement.
4.Completion
Completion of the Buy-Back will be effected on the Redemption Date, on which date:
(a) the Buyer will pay the amount determined under clause 3 to the relevant Holder; and
(b) the Holder will deliver to the Buyer a duly executed transfer of the Buy-Back Shares.
5.
Appointment of attorney
By virtue of its holding of the Buy-Back Shares, each Holder irrevocably appoints any director or officer or duly authorised attorney of the Bank (each
an Attorney) as the true and lawful attorney of the Holder to execute a transfer to the Buyer in registrable form of the Buy-Back Shares (or such other
document by which title to the Buy-Back Shares may be vested in the Buyer) and to give any necessary direction to any other person or take any other
action which may be required to facilitate the transfer to the Buyer of the Buy-Back Shares, and agrees that in exercising this power of attorney, the
Bank or any Attorney shall be entitled to act in the interests of the Bank (or a nominee) as the Buyer of the Buy-Back Shares.
6.
Further assurance
The Holders will do all things necessary or desirable to give effect to the provisions of this agreement and the transactions contemplated by it.
7.
Definitions and interpretation
In this agreement, the following expressions have the following meanings:
Buy-Back means, in relation to the BOQ CPS, the purchase of BOQ CPS from the Holder pursuant to this agreement.
Buy-Back Price means the Redemption Price determined under the Terms of Issue.
Buy-Back Shares means the BOQ CPS referred to in the Early Conversion/Redemption Notice which are the subject of the Buy-Back under this agreement.
Buyer means the Bank.
Early Conversion/Redemption Notice means a notice given by the Bank to Holders from time to time under clause 13.6 of the Terms of Issue under
which the Bank elects to buy back any BOQ CPS under clause 14.4 of the Terms of Issue.
Holder means each Holder from time to time to whom the Bank gives an Early Conversion/Redemption Notice which indicates that BOQ CPS are to be
bought back by the Bank.
Redemption Date means the date specified in the Early Conversion/Redemption Notice as the date for completion of the Buy-Back, determined in
accordance with the Terms of Issue.
All other words and expressions used in this agreement which are defined in the Terms of Issue have the same meaning in this agreement.
BOQ CPS PROSPECTUS 2012
126
For personal use only
127
Appendix B –
Glossary
BOQ CPS PROSPECTUS 2012
APPENDIX B – GLOSSARY
ABN means Australian business number.
For personal use only
ACCC means the Australian Competition and Consumer Commission.
Additional Tier 1 Capital means additional tier 1 capital as defined by
APRA from time to time under the Basel III Prudential Standards.
ADI means an authorised deposit-taking institution which is authorised
under the Banking Act to take deposits from customers.
AGM means annual general meeting.
A-IFRS means Australian equivalents of the International Financial
Reporting Standards.
Allocation means the number of CPS allocated under the Offer to:
ıı
Applicants at the end of the Offer Period; and
ıı
Syndicate Brokers and Institutional Investors under the Bookbuild,
and Allocate and Allocated have the corresponding meanings.
Allotment means the issue of CPS to Applicants on the Issue Date under
their Allocation. Allotted and Allot have the corresponding meanings.
Applicant means a person who submits an Application in accordance with
the Prospectus.
Application means a valid application made under this Prospectus by using
the relevant Application Form to apply for a specified number of CPS.
Application Form means the application form (including the Applications
Forms for the Shareholder Offer, the Broker Firm Offer, the Reinvestment
Offer and the General Offer) attached to or accompanying this Prospectus, or
an online version of the Application Form, upon which an Application may
be made.
Application Payment means the monies payable on Application, calculated
as the number of CPS applied for multiplied by the Face Value.
APRA means the Australian Prudential Regulation Authority.
ASIC means the Australian Securities and Investments Commission.
ASX means ASX Limited (ABN 98 008 624 691) or the market operated by it,
as the context requires.
ASX Listing Rules means the listing rules of ASX from time to time with any
modifications or waivers in their application to BOQ, which ASX may grant.
ASX Operating Rules means the market operating rules of ASX as amended,
varied or waived (whether in respect of BOQ or generally) from time to time.
ATM means an automated teller machine.
Banking Act means Banking Act 1959 (Cth).
Basel Committee means the Bank for International Settlements’ Basel
Committee on Banking Supervision.
Basel III means the proposed revised framework being developed by the
Basel Committee for the calculation of capital adequacy for banks.
Basel III Prudential Standards means APRA Prudential Standards APS
001, APS 110, APS 111 and APS 222 and Reporting Standards ARS 110.0
and ARS 111.0 released by APRA on 28 September 2012 and expected to
come into force on 1 January 2013.
BBSW means the Bank Bill Swap Rate as defined in the CPS Terms.
Bookbuild means the process described in Section 6.5 that determined
the Margin.
BOQ means Bank of Queensland Limited (ABN 32 009 656 740).
BOQ Group or Group means BOQ and each of its controlled entities.
Broker Firm Applicant means an Australian or New Zealand resident retail
or high net worth client of a Syndicate Broker invited to participate through
the Broker Firm Offer.
Broker Firm Application Form means the invitation made to Australian
or New Zealand resident retail clients of the Syndicate Brokers to apply
for a broker firm Allocation from the relevant Syndicate Broker under this
Prospectus.
Broker Firm Offer means the offer of CPS under this Prospectus to retail
and high net worth clients of Syndicate Brokers who have received a broker
firm allocation from their Syndicate Broker.
CGT means capital gains tax.
CHESS means the Clearing House Electronic Subregister System operated
by ASX Settlement Pty Limited (ABN 49 008 504 532).
Closing Date means the last day on which Applications will be accepted,
which is:
ıı for the Reinvestment Offer, Shareholder Offer and General Offer, 5:00pm
(Sydney time) on 13 December 2012;
ıı for the Broker Firm Offer applications in respect of Reinvested PEPS,
5:00pm (Sydney time) on 13 December 2012; and
ıı for the Broker Firm Offer (excluding applications in respect of Reinvested
PEPS), 5:00pm (Sydney time) on 18 December 2012.
Common Equity Tier 1 Capital means common equity tier 1 capital as
defined by APRA from time to time under the Basel III Prudential Standards.
Common Equity Tier 1 Capital Ratio means the ratio of BOQ’s Common
Equity Tier 1 Capital to its total risk weighted assets as defined by APRA
from time to time.
Core Tier 1 Ratio means the ratio of BOQ’s Fundamental Tier 1 Capital to
its total risk weighted assets, as defined by APRA from time to time.
CPS means the Convertible Preference Shares to be issued by BOQ
according to the CPS Terms.
CPS Holder means a person whose name is for the time being registered in
the register of CPS as a holder of CPS.
CPS Terms means the terms of issue of CPS as set out in Appendix A.
BOQ CPS PROSPECTUS 2012
128
APPENDIX B – GLOSSARY
Corporations Act means the Corporations Act 2001 (Cth).
For personal use only
Directors means the directors of BOQ as at the date of this Prospectus.
Distribution Restriction means the restrictions summarised in Section
2.3.9 and set out in clauses 6.10 and 6.11 of the CPS Terms.
Dividend Payment Tests means the tests that must be satisfied before a
Dividend would be paid as explained in Section 2.3.8.
Early Conversion means the optional conversion of CPS to Ordinary Shares
which BOQ may elect to occur on the Optional Conversion/Redemption Date or
following a Regulatory Event, Tax Event or Potential Acquisition Event unless
the Conversion Conditions are not satisfied or, in accordance with the CPS
Terms, the CPS have otherwise been Converted or Redeemed.
Eligible PEPS Holder means a PEPS holder who is:
ıı
a registered holder of PEPS on the PEPS Record Date;
ıı
s hown on the PEPS register as having an address in Australia or New
Zealand; and
ıı
not in the US or acting as a nominee for a person in the US.
Eligible Shareholder means an Ordinary Share or PEPS holder who is:
ıı
a registered holder of Ordinary Shares or PEPS (as applicable) at
7:00pm (Sydney time) on 9 November 2012;
ıı
s hown on the applicable register as having an address in Australia or
New Zealand; and
ıı
not in the US or acting as a nominee for a person in the US.
Expiry Date means the date this Prospectus expires.
Exposure Period means the seven day period after 7 November 2012,
being the date on which the original Prospectus was lodged with ASIC
during which the Corporations Act prohibits the processing of Applications.
Institutional Investor means an investor to whom offers or invitations
in respect of CPS can be made without the need for a lodged Prospectus
(or other formality, other than a formality which BOQ is willing to comply
with), including in Australia persons to whom offers or invitations can be
made without the need for a lodged prospectus under section 708 of the
Corporations Act and who has been invited by the Joint Lead Managers to
bid for CPS in the Bookbuild, provided that such investor may not be in the
United States.
Institutional Offer means the invitation by the Joint Lead Managers to
Institutional Investors to bid for CPS in the Bookbuild.
Issue Date means the date CPS are issued, expected to be 24 December 2012.
Joint Lead Managers means Merrill Lynch International (Australia)
Limited, RBS Morgans Limited, Commonwealth Bank of Australia and
National Australia Bank Limited.
Mandatory Conversion means the mandatory conversion of CPS to
Ordinary Shares which occurs in respect of a Mandatory Conversion Date
or an Acquisition Event, unless the Conversion Conditions are not satisfied
or, in accordance with the CPS Terms, on a Capital Trigger Event or NonViability Trigger Event. Mandatorily Convert has a corresponding meaning.
NOHC means the ultimate holding company of BOQ after any NOHC Event
which must be a “non-operating holding company” within the meaning of
the Banking Act.
NOHC Event means an event which:
ıı
is initiated by the Directors, acting as a Board; and
ıı
would otherwise be an Acquisition Event,
Face Value means the issue price for CPS, being $100 per CPS.
but the result of which would be that the person who would be the ultimate
holding company of BOQ would be a NOHC.
FATCA means sections 1471 to 1474 of the US Internal Revenue Code of
1986, as amended.
Non-Innovative Residual Tier 1 Capital means non-innovative residual
tier 1 capital as defined by APRA from time to time.
Fundamental Tier 1 Capital means fundamental tier 1 capital as defined
by APRA from time to time.
Offer means the invitation made pursuant to this Prospectus for investors to
offer to subscribe for CPS and includes the Institutional Offer, Broker Firm
Offer, Shareholder Offer, Reinvestment Offer and General Offer.
General Applicant means a member of the general public who is an
Australian or New Zealand resident and who applies under the General Offer.
General Offer means the invitation to members of the general public
who are resident in Australia or New Zealand to apply for CPS under
this Prospectus.
High Quality Liquid Assets means assets which qualify as high quality
liquid assets under APRA Prudential Standard 210 including unencumbered
cash, securities eligible for repurchase transactions with the RBA, certain bank
bills issued by other ADIs, deposits (at call and any other deposits readily
convertible into cash within two business days) held with other ADIs net of
placements by the other ADIs and any other securities approved by APRA.
129
Holding Statement means a statement issued to CPS Holders by the
Registry which sets out details of CPS Allotted to them under the Offer.
BOQ CPS PROSPECTUS 2012
Offer Period means the period from (and including) the Opening Date to
(and including) the Closing Date.
Opening Date is 19 November 2012.
OMB means Owner-Managed Branch™.
Ordinary Share means a fully paid ordinary share in BOQ.
Ordinary Shareholder means a registered holder of Ordinary Shares from
time to time.
PEPS means the BOQ Perpetual Equity Preference Shares issued by BOQ in
2007 that trade on ASX under the code “BOQPC”.
Tier 1 Capital means tier 1 capital as defined by APRA from time to time.
PEPS Record Date means 7:00pm (Sydney time) on 9 November 2012.
Tier 1 Capital Ratio means the ratio of BOQ’s Tier 1 Capital to its total risk
weighted assets, as defined by APRA from time to time.
For personal use only
PEPS Holder means a registered holder of PEPS from time to time.
Pro-Rata Dividend means the dividend accrued over the period from (and
including) 15 October 2012 to (but excluding) the Reinvested PEPS Buyback Date, in respect of each PEPS on issue, expected to be paid on the
Reinvested PEPS Pro-Rata Dividend Payment Date.
Prospectus means this prospectus as lodged with ASIC (including any
copy of this prospectus accessed electronically from BOQ’s website) and any
supplementary or replacement prospectus in relation to it.
Prudential Standard means a prudential standard issued by APRA under
its powers in the Banking Act.
RBA means the Reserve Bank of Australia.
Tier 2 Capital means tier 2 capital as defined by APRA from time to time.
Tier 2 Capital Ratio means the ratio of BOQ’s Tier 2 Capital to its total risk
weighted assets, as defined by APRA from time to time.
Treasurer means the Treasurer of the Commonwealth of Australia.
United States or US means the United States of America.
US Person has the meaning given in Regulation S under the US Securities Act.
US Securities Act means the United States Securities Act of 1933,
as amended.
Register means the official register of Ordinary Shares, PEPS and CPS
(if issued) maintained by BOQ or on BOQ’s behalf, and includes any subregister established and maintained under CHESS.
Registry means Link Market Services Limited (ABN 54 083 214 537) or any
other registry that BOQ appoints to maintain the Register.
Reinvestment Applicant means an Eligible PEPS Holder who applies
under the Reinvestment Offer.
Reinvestment Offer means the invitation to Eligible PEPS Holders to
reinvest their PEPS in CPS under this Prospectus in accordance with
Section 5.
Reinvested PEPS means the PEPS held by an Eligible PEPS Holder that are
reinvested in CPS, under the terms of the Reinvestment Offer.
Reinvested PEPS Buy-back Date is 24 December 2012.
Residual Tier 1 Capital means residual tier 1 capital as defined by APRA
from time to time.
Shareholder Applicant means an Eligible Shareholder who applies under
the Shareholder Offer.
Shareholder Offer means the invitation to Eligible Shareholders to apply
for CPS under this Prospectus.
SME means small and medium enterprises.
Syndicate Brokers means any of the Joint Lead Managers (or their
affiliated retail brokers) and any other participating broker in the Offer.
TFN means tax file number.
BOQ CPS PROSPECTUS 2012
130
For personal use only
131
APPLICATION
FORM
BOQ CPS PROSPECTUS 2012
For personal use only
CORPORATE
DIRECTORY
BOQ CPS PROSPECTUS 2012
136
For personal use only
CORPORATE DIRECTORY
137
Registered Office and Head Office
Bank of Queensland Limited
Level 17, BOQ Centre
259 Queen Street
Brisbane QLD 4000
Joint Lead Managers
Commonwealth Bank of Australia
Ground Floor
Tower 1, 201 Sussex Street
Sydney NSW 2000
Website: www.boq.com.au
Merrill Lynch International (Australia) Limited
Level 38, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Directors of Bank of Queensland Limited
Neil Summerson (Chairman)
Stuart Grimshaw (Managing Director)
Steven Crane
Roger Davis
Carmel Gray
Richard Haire
John Reynolds
Michelle Tredenick
David Willis
Legal Adviser
Clayton Utz
Level 28, Riparian Plaza
71 Eagle Street
Brisbane QLD 4000
Tax Adviser
KPMG
10 Shelley Street
Sydney NSW 2000
Structuring Adviser
Merrill Lynch International (Australia) Limited
Level 38, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
BOQ CPS PROSPECTUS 2012
National Australia Bank Limited
Level 25
225 George Street
Sydney NSW 2000
RBS Morgans Limited
Level 29
123 Eagle Street
Brisbane QLD 4000
Co-Managers
Bell Potter Securities Limited
Level 38, Aurora Place
88 Phillip Street
Sydney NSW 2000
Ord Minnett Limited
Level 8, NAB House
255 George Street
Sydney NSW 2000
Share Registry
Link Market Services Limited
Level 15
324 Queen Street
Brisbane QLD 4000
For personal use only
BOQ CPS PROSPECTUS 2012
138
For personal use only
139
BOQ CPS PROSPECTUS 2012